5 mistakes to avoid when diversifying your portfolio
Diversification is a basic tenet of building and managing your investments. But these typically constitute a large portion of your investment holdings and excluding them in estimating the asset allocation may lead to wrong decisions on risk and return from the portfolio. This is because after a certain point, adding new investments won’t reduce the risk, but may prove to be of poorer quality or fit and increase the risk in the portfolio. Evaluating individual investments to be included in the mutual fund scheme’s portfolio, monitoring performances and making sell, buy and hold decisions are the job of the fund management team to whom you pay a fee. When you build a portfolio of diversified assets along with the risk and return features, you also need to align the liquidity features of the products to the needs of your financial goals.
Diversification across asset classes is vital for a dynamic and strong portfolio
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