Risk is an important factor to consider any time you choose investments. There are a number of risks when it comes to investing, and learning how you can best mitigate those risks now will mean higher returns in the future.
Below are three concepts you’ll need to remember as you’re making investment decisions. Internalize this information, it will serve you and your portfolio well.
1. Understand that diversification is critical.
You’ve heard it said that you should diversify your portfolio. This is one of the easiest concepts to grasp and it is also one of the most important.
Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land. – Ecclesiastes 11:2 NIV
This timeless investing principle has one critical purpose: to eliminate risk. Keeping a portfolio containing a variety of investments smooths out the rough patches in the stock market. It lowers your volatility.