Portfolio Diversification

Portfolio diversification is a good way to measure the risks of your investments in stocks. For example, having more exposure to the oil and gas sector may be affected by low oil and gas prices because this will cause a slowdown in the sector.

The portfolio below shows the type of portfolio below demonstrates high risks to the oil and gas sectors.

If your portfolio have a higher exposure to property for example, then if property prices nosedive, your portfolio value will nosedive too.

Therefore, it is important to have a strategic asset allocation that will allow your portfolio to endure hard times in an even of a slowdown on a particular sector.

The portfolio example below is an example of how to diversify your portfolio.

Property	30%	Betting on long term increase of property prices
Healthcare	30%	Buffer against Crisis
Finance	30%	Center of Growth
Oil and Gas	5%	Potential for growth
Technology	5%	Potential for growth