Managing investment risk
One of the most effective ways to manage investment risk is to spread your money across a range of assets that, historically, have tended to perform differently in the same circumstances.This is called ‘diversification’.
In the most general sense, it can be summed up with this phrase:‘Don’t put all of your eggs in one basket’.
While that sentiment certainly captures the essence of the issue, it provides little guidance on the practical implications of the role diversification plays in a portfolio.
Time to take stock of your particular situation?
As with all investments, investors should always check whether the strategy and underlying investments of any fund, or combination of funds, match their own attitude towards risk and return.Whatever phase of investment you are in, from capital accumulation to drawing upon your savings; there is always a valuable role for effective diversification.
Read our factsheet to review some considerations for the most effective ways to manage investment risk