Every investment has risks attached to it. The eventual success of your investments depends to a great extent on how you manage these risks. One way of doing it is to put your money across different investment baskets. Here are 3 compelling reasons to adopt such an approach.
All it takes is one mishap Often one investment, especially in the equity market, catches the fancy of many. This is thanks to an exceptional run and its perceived potential. However, a plunge, that is so typical in such cases, ruins the future of many. It is smart to consider and invest in many promising investment candidates to remain unaffected by the risks associated with one.
The reality of return cycles Returns for asset classes such as equity, debt, commodities go through cycles of ups and downs. Investing too much at the market peaks might mean investments languishing for a long time.
The myth of safe havens Fixed deposit is a favourite among Indians for its predictable returns. However, it is regularly mauled by India’s high inflation and can’t be helpful in meeting major future needs like child’s higher education. It is important to recognise the risks associated with investments and ensure that investments are not too exposed to any one risk.
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