Three tricks you can use to diversify your portfolio
Diversification helps in managing the risk, since the value of your assets can change every now and then. In fact, since prices of different assets often move in opposite directions, having more than one asset in your portfolio helps limit the risk or impact of sharp price changes in one asset class. Horizontal:Unlike vertical diversification, which has various types of financial instruments, a horizontal diversification is more within a single asset class. Once the first step of vertical diversification is in place, you should look into horizontal diversification, So, within each asset class like equity or fixed income, you should ideally have more than one type of security. Likewise, when it comes to debt instruments, invest in more than one type of debt-oriented mutual funds with varying duration, you are spreading the risk across the same asset class or diversifying horizontally.
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