Investing is a tricky art to master, one which is helped by experience and the feel of being in the field day-in day-out. Lots of people already know some basic tips about maximizing investments, such as using tax-free ISA’s to their advantage, or plans such as ULIPs and pension programs to create guaranteed payments at important stages of their lives. What they often don’t know about is market diversification.
Market diversification is the smart way to keep your portfolio balanced and spread amongst different areas. Doing it properly will give you a balance between potentially big pay-offs in the future, steady income over time, and solid assets which can be liquidated if needed. It also limits your risks to any kind of crash or catastrophe, a big consideration for any investment plan. We aren’t going to recommend specific markets here today because they are always subject to change, and this plan needs to be relevant to any time. Instead we’ve picked out types of market diversification we’d recommend. There’s also the option to adjust based on your own preferences.
- A Secure, Pay-out Oriented Market (Dividend Stock/Bond in a Developed Market for Example)
Having a secure investment means that you are less likely to lose money, though you are also less likely to make large gains. The key with this type of investment lies in that stability though. Making smart choices with this investment is how you secure your money for the long-term while still creating some on-going return to work with. A government bond or dividend stock both create ongoing income for you, with the original investment still being locked in as well. The risk is that the bond defaults or stock price drops, lowering your investment value, which is why a stable, developed market is recommended.
- A Higher Risk Pay-out Market (Capital Stock or Emerging Market Investments)
A more thrilling type of investment is to go with the higher risk options. You can’t realistically risk too much here because there’s a bigger chance of losing some or all of your investment, but the bigger pay-off can be attractive and could be the make or break difference for early retirement. This is the kind of area where finding that promising company or market is the holy grail.
- Short-Term Markets (Forex/Derivatives)
These investments are much more fluid and short-term. The advantage of shorter term movements is that experienced investors can hedge their bets and over time successful traders will always make some gains. These trades can be especially vulnerable to sudden fluctuations, so potential changes can be big in both directions.
- Physical Assets
Physical assets are the often-overlooked investment market. It includes real estate, jewels and precious metals – anything physical that can be traded for cash. The idea here is that even a total global market crash couldn’t wipe out your wealth, because you still have something of value to trade/sell. It’s a smart way to lock in some equity for emergencies.
About AEGON Life
Launched in July 2008 with pan-India operations, AEGON Life Insurance Company Limited has a vision to be the most recommended new age life insurance company. As a joint venture between AEGON – world’s leading financial services and Bennett, Coleman & Company – India’s leading media house, AEGON Life Insurance adopts the power of global expertise to facilitate a direct to customer approach, leveraging digital platforms to bring transparent solutions, and to prioritize customer’s needs. Our product portfolio includes term life insurance plan, pension plans, unit-linked insurance plans (ULIPs), health insurance plans, child education plans, and more.