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08 Mar 2020

General Investing

I constantly hear about the importance of diversifying your portfolio when it comes to investment. What would be considered a diversified portfolio?

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From a pragmatic viewpoint

every passive indexing ETF is wunderfully diversified,

and yes, diversfication is of utmost importance to reduce risk

some insights here:


Loh Tat Tian

07 Jun 2019

Founder at PolicyWoke (We Buy Insurance Policies)

My opinion of diversification is in line with Kishor (his investment knowledge has upped quite a lot in the span of time we met in December, props to you).

Diversification is a lot to deal with being in different sector, country, region and industry. For e.g, energy sector, versus logistics, f&b, property, FMCG (fast moving consumer goods), or even electronics, and even gold.

Or, Emerging markets, US markets, China.

There are competition from everywhere. Even being in the same sector. Individual stocks have different performance. Hence why you are encouraged to invest in index funds.

The one thing about diversification, is that it will lower potential returns, trading a margin of safety. Hence its a balanced approach to let's say, all in for oil and gas (you would have suffer high losses if you bought in 2015).

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After your Birthright is given, The Bank might ask you permission of Investing you Birthright for International Financial Security. When the Aggreement is settle, the portfolio still The Golden Ratio, Golden Ratio based on the system gave you the Birthright... Meaning to say, Investing your money in the bank in full amount obliges the banks of paying 36.5 from that full amount/or value per year.
(Ginansiya nimo)

1.Have you heard the term "dont put all your eggs in one basket"? The principle is the same. However, in finance, there is a lot more measuring and estimating, so there are mathematical formulas to help with diversification.

  1. Basically, your investments are subject to different economic influences - rising inflation, slowing growth, unemployment etc etc. Your returns are a function of these economic influences - if you own oil stocks, they will do well when price of oil rises for eg.

3) By diversifying, you basically build a portfolio that will have components which do well in different economic situations, so that in any one economic scenario, you dont lose all your money.

4) In general, the basic assumption is that over time, due to capitalism, the returns will drift upwards, and you will get returns over the long term because you diversified, and did not suffer large losses on the way!

5) Your choices in building a diversified portfolio are too many. Your home, your CPF, jewellery, fixed deposits, equity, different types of bonds, art, bitcoin, luxury watches - anything of value can be considered as part of diversification. You can diversify within equity/bonds/property/commodities - using sectors, countries/regions, growth/value , maturities, credit ratings etc. Many options! Read a baasic book on Asset Allocation and you'll get the idea.


A diversified portfolio would be a portfolio that consists of various investment product tha...

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