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Variety is the spice of life investments

If you are thinking about making an investment and have heard about varied portfolios, carried out some research but still not really sure what they are, then please read on.

A varied or diversified portfolio is a collection of financial investments such as bonds, stocks, cash/or cash equivalent and commodities. A portfolio can include a wide range of assets, which will all react differently in the same economy and therefore spread the risk. They are generally believed to be a good investment because a variety of investments should yield a higher return and investors will in turn face a lower risk.

Many investors choose a varied portfolio because although it doesn’t guarantee against loss, by diversifying they may reach their long-term financial goals quicker while minimising the uncertainty.

Most investment professionals agree that, although there is no guarantee against loss, having a varied portfolio helps to minimise risk. By diversifying your investment, you will help reduce risk, which may lead to a better return.

Popular portfolios in detail

Here we briefly explain five popular types of investment portfolios to help you make your investment choice.

The Aggressive Portfolio

An aggressive portfolio takes on great risks in search of great returns. They are mostly found in the technology sector but are also found in other industries. Investors who wish to invest over the longer term often choose these. [1]

The Income Portfolio

This type of portfolio focuses on investments that make money from dividends or other types of distributions to stakeholders. An income portfolio can complement an investor’s other income such as their salary or during retirement, but they are subject to the economic climate. [2]

The Defensive Portfolio

A defensive portfolio invests in everyday essentials such as food & beverage, household items and even includes alcohol and tobacco. They are considered non-cyclical so always in demand no matter how well the economy is doing or not doing. They are considered as a good option for investors who want consistent growth, solid dividends and low volatility. [2]

The Speculative Portfolio

Investing in a speculative portfolio is the riskiest from our list. A speculative portfolio could include technology or healthcare businesses and IPOs*. Financial advisors usually advise that no more than 10% of an investor’s assets be used to fund a speculative portfolio. [2]

The Hybrid Portfolio

This portfolio would traditionally include blue chip companies (nationally recognised, well established and financially sound businesses) and a mixture of other investments such as bonds, commodities and real estate. For investors they are usually seen as a safe investment but even they can be subject to volatility and failure. [2]

Whatever type of investor you are, there are many ways to diversify. Before you choose, you need to decide what your future goals are, your appetite for risk and even what sort of person you are.

If you would like to contact a member of our team to ask about varied portfolios or have a general question regarding investing, you can do so by clicking on this link: https://www.jpdcapital.com/contact/ to send us a message. One of our investment professionals will get back to you ASAP.

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