Diversifying your investment portfolio is the key to long-term success — this approach helps maximize returns while also minimizing risk and ensuring that there is less exposure to economic volatility in any one particular sector. Ultimately, this creates a highly balanced approach to your investment strategy, which in turn, helps create long-term financial security.
What is Investment Diversification?
Investment diversification is an investment strategy whereby you spread your investments across a variety of asset classes and types to reduce the risk associated with any single decision. It essentially means investing in different assets, sectors, and geographies — both domestically and internationally.
The idea behind this strategy is simple: putting all of your eggs into one basket can be dangerous if that basket falls. That’s why it’s important to build a diverse portfolio made up of investments from different places so that if one loses value or isn’t performing well, the others can still help your investment perform better than average and protect you against outsized losses sustained from any single security or asset class.
The Wrong Way To Diversify
The biggest mistake many investors make is to focus only on traditional investments like stocks, and ignore alternative investments. Alternative investments can provide a unique way to diversify your portfolio, while also providing potential opportunities for higher returns. Examples of alternative investment vehicles include venture capital, private equity, hedge funds, and cryptocurrency. While these can be great options, we’ve found investing in technology and e-commerce deals or syndicate to be the most lucrative.
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What exactly has worked for us? To ensure the best results, we partner with a wide range of world-renowned operators to source top-of-the-line digital e-commerce, manufacturing and office assets. This helps us find and acquire undervalued investments. Our approach is designed to foster successful partnerships that will drive success in all aspects of our business model. We then ask ourselves: where can we step in to add value to our investments, and help refine any areas needing improvement? Whether it’s coming in to improve marketing efforts, internal operations, logistics and 3PL, or anything else.
Unique Investment Vehicles
With traditional markets like real estate becoming more and more crowded, it’s important to know where to look for new opportunities. When diversifying your investment portfolio, the early bird gets the worm.
So how do savvy investors do it? And what should you avoid? Here are three key tips to keep in mind:
Stay informed on current trends and market news.
- This will help you identify potential new investment opportunities as they arise. Additionally, don’t forget to keep an eye on global trends – they can offer valuable insights into future market movements. Remember that if you’re looking to find undervalued investments, you’ll need access to market data that isn’t readily available to everybody. In order to find the best deals, you’ll need to be or be partnered with an accredited investor or institution.
Don’t put all your eggs in one basket.
- Diversification is critical to mitigating risk and maximizing returns. When diversifying your portfolio, be sure to consider a variety of asset classes. The main thing to remember here is that having too little or too much diversification in your portfolio can spell trouble. Investing all of one’s money into stocks, for example, regardless of the range involved, is taking on a risk that could leave you empty-handed; similarly, having only a handful of investments with equal weightings presents its own risks — as it drastically reduces diversity without any guarantee the investment will succeed.
Have a clear investment plan and strategy.
- Before making any moves, take the time to develop a well-defined investment plan that outlines your goals and objectives. Once you have a plan in place, stick to it! Emotional decision-making is one of the biggest traps novice investors fall into.
Passive Investment Management
Investing is no longer a gamble. With the help of an experienced professional, smart and strategic investments can be made which give back control over your future financial well-being. Proper passive investment management provides access to global alternative investment opportunities with sound returns that are tailored in accordance with individual lifestyle objectives – helping secure both long term and passive income streams without sacrificing quality of life.
Taking advantage of the expertise offered by experienced investment managers is a smart way to jump into passive investment opportunities. Quality investment managers understand global markets and their associated risks, allowing them to build a tailor-made portfolio that fits your needs, from risk tolerance levels through to timeline objectives. You don’t want to take chances with something as important and meticulous as managing investment finances – and you don’t have to.
Building a More Aggressive Portfolio
We recognize that not all investors have the same risk tolerance. That’s why we think it’s important to build a portfolio tailored to each investor. To help our clients build more aggressive portfolios, we give them access to investments with higher risk/reward profiles. Our experience has taught us that investing in unique and future-forward businesses is one of the best ways to deliver outsized returns. We are constantly looking for new and innovative investments that offer the potential for high returns, while also helping our clients mitigate risk.
Peoples Equity Group has cemented its reputation among the world’s leading investors, boasting over a century of collective industry experience and an impressive track record. In the last two years alone we’ve achieved total EBITDA exits totaling $22 million – a testament to our approach and skillset in gaining exclusive access to deals unavailable elsewhere. Looking for premier passive investment management? Click the banner below to consult with a PEG team member.
