INVESTMENT PORTFOLIO DIVERSIFICATION FOR MILENIALS

INVESTMENT PORTFOLIO DIVERSIFICATION FOR MILENIALS

 

Friends, investment activities are currently increasingly popular, including by millennials. Everyone who invests certainly wants to make a profit and hopes that the investment value will grow in the future. In investing, an appropriate strategy is needed in order to increase capabilities and avoid potential losses, one way is to diversify the investment portfolio.

Diversification means placing investment funds in several investment instruments with different characteristics. What is meant by characteristics here are liquidity, risk, and potential returns. An example is the potential return if investing in stocks will be different from bonds, sukuk and mutual funds.

The example is don't put all your eggs in one basket. Because if the basket falls, then all the eggs will fall.

This means that if you want to invest, then don't invest in just one instrument. Buddy must create a diverse portfolio in order to minimize losses and maximize profit potential.

For example, if you have an investment in the shares of an issuer, then these shares continue to decline or weaken, then the value of your investment will also be eroded. However, if you change your investment placement by buying two shares from different companies, then this will reduce your investment. loss due to possible decrease in the value of its shares.

There are several steps you can take before diversifying your investment portfolio:

1. Make sure the Investment Portfolio is in Accordance with the Risk Profile

information at a glance, a risk profile is an indicator of your ability to accept risks from the investments you make. The risk profile is generally divided into three, namely destructive, moderate, and aggressive.

Simply put, analysis can be said to be a type that does not like extreme changes, where investors will be happier if the results obtained are not balanced even though their performance tends to be low.

Furthermore, the moderate type is just the opposite, where the culprit is able to accept higher risks. Finally, the aggressive type is a combination of the two, in which the perpetrator dares to take high risks in order to get the maximum possible return.

After understanding the risk profile, also determine your investment goals, whether for long, short or even medium term needs. After that, develop investment products that suit your risk profile and financial goals.

 

2. Determine the Allocation of Investment Funds

After determining the investment product, then determine the ratio of placement of funds for each investment product in your investment portfolio. You need to know, a portfolio that can be said to be effective is one that contains a combination of various types of assets, along with different characteristics.

The combination of various asset classes in the portfolio is a risk diversification technique that can increase investment returns while minimizing investment performance. For example, if you have an aggressive risk profile, then the asset allocation ratio in your investment portfolio is 60% in stocks, 20% in bonds and 20% in mixed mutual funds.

If you have a moderate risk profile, then the asset allocation ratio in your investment portfolio, consists of 50% in stocks and 50% in fixed income mutual funds. Or, if you have a regulated risk profile, then you can combine your investment with a 60% placement in Money Market Mutual Funds, 20% in Stocks, and 20% in Bonds.

 

3. Be observant in selecting investment portfolios

One tip that you need to apply, choose an investment with a different rate of return. However, also know that a high return on average also has a high risk. In addition, choose investments in different sectors as well. Remember, friends, risk is not to be avoided but managed so that you can minimize potential losses and still get optimal profits.

 

4. Regularly make adjustments.

Diversification is not something that only needs to be done once. So, so that the investment runs smoothly, check your investment portfolio regularly, and make changes to the investment instrument if its performance is not in accordance with the objectives or financial strategy and risk profile.