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Strategy
No. 7:
Minimise your Risk
Most shares will rise as
the market rises, and will fall as the market falls.
There's little you can do to avoid this. However, if you
don’t have time to watch the market you can take
action to minimise the risk of losing too much of the
value of your portfolio.
To do this, ensure that
the shares that you purchase are representative of
companies from a wide range of industries. So that your
portfolio does not lose too much of its value when a
particular sector is struggling, you should ensure you
own shares representing companies from a wide range of
industries, including technology, construction, finance,
manufacturing, media, resources and retail.
If your shares are all
in construction companies, your entire investment value
falls when that sector suffers a downturn. However, if
you have spread your risk, your investment will be
cushioned if other sectors are experiencing growth. The
old adage, don’t put all of your eggs in the one
basket, is an apt one for the time poor investor.
Next:
Keep an Eye on your Stock
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