By definition, diversification is a risk-reducing technique. In this scheme, the investment is distributed in different financial instruments, industries and other options for that matter. The actual aim is to maximize the returns on investment by investing in separate areas, which would react to the same event differently.
According to investment professionals, loss cannot be prevented completely by following this strategy, but it does balance risk and allow individuals to accomplish long-term financial goals. That’s the long and short of diversification.
Are you looking to diversify your portfolio? If yes, then you also know that diversification strategy actually unlocks long-term growth for individuals and it keeps investors’ money safe. As is understood in the industry, no selected portfolio diversification formula works for all, but certain principles do help get to your goals.
Funds and other options
There are many ways to build a diversified portfolio. Mutual funds and their recent cousin, exchange-traded funds (ETFs) are some options you can look into. As a whole, you can manage a large portfolio with less risky investment options. Other than that, you can also look into a broad range of stocks (blue chip stocks, bonds and high-rated corporate bonds) or balanced portfolio with bonds and stocks.
How Iban Wallet diversifies portfolios
Another recent entrant in the market is Iban Wallet. If you are looking to minimize your risk and maximize returns on your investment, you can invest in this viable investment scheme. It could be termed as an investment account, but the returns and benefits are far, far better.
As part of your diversification strategy, you can use Iban Wallet and deposit funds to get a daily return on your investment. The different account types provide a projected interest rate from 2.5% to 6% as shown below. However, the duration for withdrawal differs from one account to the other except the basic account. The figure belows expands on the conditions of these accounts and returns they generate.
Also, these accounts allow for diversification in its mechanism. For instance, when a person invests in a particular account, the amount is lent to a number of borrowers. For any account, the investment is always distributed among multiple borrowers. This is a solid diversification strategy that minimizes risk and loss incurred by an investor. These accounts are liquid and for a minor charge, you can ask for withdrawal as easily as you invest.
Interestingly enough, these accounts are not regulated under the government-sponsored depositor protection plans. As a result, investors are safe from defaults and incurring monetary losses. Many safeguards are in place which limits possibility of a loss.
The Iban Wallet is a viable option for all the budding investors and non-investors who wish to test the waters with portfolio diversification. This will allow them to formulate a strategy that works for them all-round the year. From there on, they can move on to bigger and better options. But for right now, it is prudent to use Iban Wallet in a bid to diversify your investment. Start small, but start now.