Jul 28, 2016 2 min read

Feed Your Portfolio with Diversified Schemes

Nowadays, when we are suffering from the hiking inflation rates, we must have such portfolio which is designed in a manner to provide the maximum return. Know, why we need to focus on diversification to meet our financial goals by reading this blog.
Anything that offers something different or some more becomes preferable. Isn’t it? The reason is that it adds value. Suppose you buy a biscuit from one shop for Rs.10, and your friend buys the same biscuit at the same price but he gets a chocolate free with it. What will you do? Apparently, next time you will also visit that shop. Every human being has a rational behaviour and thus wish to get the extra benefits always.

While putting money into the mutual funds or any other investment, you desire to fetch the maximum possible returns. But, have you ever evaluated them? Are you attaining the highest yield from your investment? Might be yes, but still, you should be sure.

You must be familiar with a very commonly term used in the mutual fund, i.e., “Portfolio.” When you put your monies into the mutual fund programme, you or the fund manager on your behalf creates a portfolio which shows the allocation of the assets of your investment scheme. Do you know portfolio plays a very important role in our investment strategies? It is the well-designed portfolio only which assures good returns.

So, how to prepare a portfolio to fetch the maximum benefits? The only answer is “Diversification’’, which means putting the funds into varied investment assets such as equity, debt, etc. The main aim of diversifying a portfolio is reducing the risk and maximising returns.

Why go for the diversified portfolio?

We can understand the same with an example. Suppose, you make an investment in the transportation industry. Due to the changes in government policies, the pilots and rail employees go on strike, which causes the cancellation of all the flights and train journeys. And accordingly, you suffer a reduction in the stock prices and unfortunately the value of your investment shall fall.

So in this case, if you would have invested certain funds into some different project ventures say hotel industry, a part of your investment would not have suffered such loss. This is the reason of opting the diversification portfolio.

Further, while choosing the class of assets as well we should make a better choice. Although, equity is the most profitable asset class, but we should put some of our monies into the bonds or index funds as well so that in hard times at least we receive a fixed income.

Thus, now it would be clear to you that why we should go for diversifying the portfolio. Just like we provide high nutritious fodder to the cows and get high protein milk. Similarly, by feeding the portfolio with diversifying fund schemes, we will attain maximum return.

Tips to Diversify Portfolio:

1. Give Expansion to your monies.
2. Make a better choice.
3. Make sure that the value of your invested money has been appreciated.
4. Be cognizant of the overall performance and whenever you feel it is going down, leave the same straight away or switch on to another one.

Accordingly, the portfolio diversification shall help you to attain maximum returns out of your investments and assure to let you reach your desired investment goals.

If you wish to opt mutual fund investment and need a ready to go advice on the portfolio diversification, you can take the services of My SIP Online, which has a team of professional consultants and advisor who are indulged in diversifying the mutual fund schemes.