Portfolio management

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4. Diversification: summary

"Diversification" is investment jargon for not keeping all your eggs in one basket. You distribute your eggs among several baskets to avoid going hungry in case one basket slips through your fingers. Likewise, you should distribute your capital among various assets to avoid going broke if, through bad luck or judgment, one of them fails you.

Diversification is the single most effective means of reducing investment risk. So whatever else you do, diversify.

There are five main areas of risk you need to think about. These are summarised here and discussed in more detail in the next few sections of this course:

1. First things first 2. Should you invest before paying off your mortgage? 3. Do you want growth or income? 4. Diversification: summary 5. Diversification: Safe custody 6. Diversification: asset allocation 7. Diversification: shares 8. Diversification: sectors 9. Diversification: countries 10. Balancing your portfolio 11. What should you hold where? 12. Tips for married couples 13. Lump sum or drip feed? 14. The role of cash 15. Rebalancing your portfolio 16. What to do with dividends 17. All about bonds 18. What to do if you inherit a portfolio 19. Benchmarking performance 20. Setting up a portfolio spreadsheet 21. Conclusion

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