How is a diversified portfolio similar to a thali that you order in a restaurant?

You might have gone to a restaurant and ordered a thali. It comes with multiple dishes including two types of vegetables, one daal, boondi raita, and a choice of bread, one sweet dish, and rice.

It doesn't make sense to only order rice/chapati/vegetables, right? It doesn't make your meal complete. We need variety to satisfy our appetite and get the taste of each dish. 

Similarly, when you want to achieve your dreams, whether it is to retire early, buy a dream home, or achieve financial freedom, you need to have a diversified investment portfolio (an investment portfolio is the collection of investments that you own), just like a thali with multiple dishes.

So, how do you make your investment portfolio diversified, and why is it necessary? I will try to answer these questions in the blog. So, let's begin. 

Firstly, let's understand what is investment portfolio diversification

Portfolio diversification is owning multiple assets like stocks, gold, real-estate, mutual funds in your portfolio. Just like you have multiple dishes in your thali.

Now, why it's necessary to diversify your portfolio. 

Let's look back to our thali example. If we only eat rice, it will become boring and unhealthy. Because you are not getting the taste and other nutrients of vegetables, daal, etc. 

Similarly, when you invest in a single asset, let's say gold or stocks becomes highly risky, and you may not achieve the desired results. What if the asset goes into a loss and your investment gets wiped out? 

The performance of these assets depends on the market. And the market runs on the concepts of demand and supply. If there is a huge demand for something in the market and limited supply, then the price will go up, and vice versa.

To mitigate risk, it is advisable to diversify your portfolio with multiple assets. There is a famous analogy, which is essentially the essence of diversification. It says that you should not keep all your eggs in one basket. 

To summarize, diversification is important to minimize  Portfolio losses during market uncertainty.

 Reduce risk due concentration in one type of assets.

 Preserve invested capital.

How to diversify your portfolio?

To diversify your portfolio, you need to invest in multiple assets that perform differently under different market conditions. 

For instance, when the economy of a country is doing well, equity usually performs well as corporate earnings go up. However, during this time, bonds typically do not perform well as interest rates increase, and they have an inverse relationship with equity.

On the other hand, during times of global uncertainty, gold is considered a safe haven asset and tends to perform well because people move their capital from equity. 

Hence, it's essential to have a balanced mix of these asset classes to diversify your portfolio and mitigate the impact of various market conditions.

To achieve this, you can seek help from a mutual fund distributor who is an expert in identifying your risk profile, suggesting investments, and regularly reviewing your portfolio. 

Their expertise can assist you in creating a diversified portfolio that aligns with your investment objectives and risk tolerance.

How can we help you? Here at 

mutual fund distributor, we offer investment in different assets right from a single platform including:

Mutual fund SIP we can help you identify the top mutual funds for SIP and we are the Best SIP provider.

P2P service: peer-to-peer lending is an alternative to bank FD with potentially higher interest rates and flexibility.

Equity Investment: we provide India's first AI-powered wealth management platform which can generate returns of up to 30% with expert curated portfolios.

With us, you get:

 Complete online investment in multiple assets

 One-to-one support for your queries

 Customized portfolio according to your risk profile and needs

 Financial planning for your goals in life

 Advice on asset allocation

So, are you ready to achieve your goals? Invest with us to diversify your investment portfolio and fulfill your dreams.