Don’t Put Your Eggs in One Basket: 3 Tips for Diversifying Your Investment

Now that you have invested, don’t think the learning stops there. To secure and grow your money, you need to diversify. It sounds a mouthful we know but it just essentially means “Don’t put your eggs in one basket.” Here are three tips on how to do it.

Wait, diversify what?! Just when you’ve finally understood top-ups and capital gains, here’s another investment jargon that you need to learn.

Remember the adage “Don’t put all your eggs in one basket”? That’s investment diversification in a nutshell. It is the strategy of investing in different industries so you won’t suffer so much loss when one of your investments suffers. How to do it? Here are three simple tips. 

Do it with a life insurance product

Most life insurance policies nowadays are offered with investment components. This means you are not just covered for any eventualities. You are also able to grow your money while insured. This is because the amount you pay for your insurance is also invested in different funds, allowing your money to earn.

Pro Tip: Use top-ups to get your money to grow more.

Consider Fixed Income Funds

Fixed income funds are investments where you are paid a fixed interest rate on a fixed schedule for the amount you invested. After a pre-agreed period, the amount you invested will be given back to you. Often, these are bonds issued by government or corporations who borrow money to raise funds for projects. Government is among the safest kinds of investment you can make because the government rarely defaults on their financial obligations.

Pro Tip: Go for high quality, short-term government bonds.

Spread your money

When considering investment options, don’t just put your money in one industry or one category. Spread them to different groups. For instance, when buying stocks, don’t just go for energy or telecoms just because it’s the current hot item. Sure, put your money in those industries but don’t forget to put some, too, in property, bank, and a bunch of others. You can use the same principle when choosing funds to invest in. Don’t just put all your units in equity funds. Put some, too, in bond funds and in balanced funds.

There are a lot more different ways you can diversify your investments, and you don’t have to rush into it. Taking your time to understand all the options is not being slow but being prudent. The bottomline: It pays to get a head start on these things so you can enjoy the benefits earlier.