Properly Diversified Investments

Properly Diversified Investments
What is diversity?
Simply put, it means spreading your investments in a variety of different goods. The aim is to soften the ups and downs over time.
Investment itself is not "rich" even if you buy mutual funds that are considered "different" that still has only one type of activity.
Distribution measured by your overall portfolio, or all of the different types of investments held in your account.
Asset allocation is the process of selecting the type of activity is necessary to have diversity. This is an action that you buy a different type of investment instruments.
The final goal is a number of different investments depend on a number of different activities.
The expectation is that, holding a bunch of different goods, no property, you can sink your portfolio - you make money when the market is when you go down and when it goes side to side.

Diversification is important or not.
There is nothing "wrong" with investments in small, medium or large securities and bonds. But this does not mean you automatically have a variety of your investment.
Medium, small and large cap property stocks, which only allows you to have a variety of actions.
You might ask: "OK, this is the problem."
Think of it this way: dinner plates are 10 different types of vegetables with different colors and textures. But overall, it's still a plate full of vegetables.
Vegetables that can be very different tastes. Again, it is still a plate full of vegetables alone.
In order to have a healthy body. (Diversified portfolio), you will need other groups (of assets), together with the exercise. (Processes, techniques and investment decisions).
Equity asset class that has a section called. In the book of William. O'Neils "how to make money in stocks," explains historical phenomena that 3 of every 4 shares at "market" trends.
This means that 75% of the shares will move in line with the general index of the market that you see on the news every night.
When the stock market decline, most stock market continued to decline, regardless of whether they are small, medium or large cap.
The good news is that when the stock market in other activities that are likely to rise.
So a lot of different titles may appear different. But it's still just a set of actions. The point of a variety of investment is to have money in activities that move up and down at different times.

Factors that influence the distribution.
This is the hardest part, the answer to the question "Do you have a variety," is ... depends. That's why the technical advisor on the investment portfolio from stocks and bonds that have a variety ... only a very narrow range.
When you choose an investment that most people would consider stocks, bonds and real estate. In fact there are many more tools at your disposal.
The classifications that follow will help you learn to be organized by asset class