Diversification is a topic frequently discussed, especially in the world of mutual funds. Rightly so, because people who invest in mutual funds may be newcomers and want some safety for the funds they commit. Diversification is the process of buying a basket of stocks/assets in such a way that the losses are minimized when the…
In the last Chapter, we learned the need for diversification, if you have not read it yet, please do so. In this Chapter, we will learn a bit about the technical aspects surrounding diversification. Mutual Funds are inherently the best diversification financial instrument ever invented. MFs pool money from the public and then invest in…
We discussed the concept of diversification in the last chapter. If you have not read it, please do so. The current chapter will look at why we need diversification in life. Diversification has its roots in uncertainty, a layman cannot predict the future, so the next best thing is to spread his wealth in multiple…
Diversification means holding multiple assets at the same time so that you do not lose heavily when few of those assets lose value. If you look at human history, you will quickly agree that “Diversification” is not something that we do naturally. A carpenter used to be a carpenter, but he does not diversify into…
