Advantage of diversifications of trade
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ᴛʜʀᴇᴇ ᴋᴇʏ ᴀᴅᴠᴀɴᴛᴀɢᴇꜱ ᴏꜰ ᴅɪᴠᴇʀꜱɪꜰɪᴄᴀᴛɪᴏɴ ɪɴᴄʟᴜᴅᴇ: ᴍɪɴɪᴍɪꜱɪɴɢ ʀɪꜱᴋ ᴏꜰ ʟᴏꜱꜱ – ɪꜰ ᴏɴᴇ ɪɴᴠᴇꜱᴛᴍᴇɴᴛ ᴘᴇʀꜰᴏʀᴍꜱ ᴘᴏᴏʀʟʏ ᴏᴠᴇʀ ᴀ ᴄᴇʀᴛᴀɪɴ ᴘᴇʀɪᴏᴅ, ᴏᴛʜᴇʀ ɪɴᴠᴇꜱᴛᴍᴇɴᴛꜱ ᴍᴀʏ ᴘᴇʀꜰᴏʀᴍ ʙᴇᴛᴛᴇʀ ᴏᴠᴇʀ ᴛʜᴀᴛ ꜱᴀᴍᴇ ᴘᴇʀɪᴏᴅ, ʀᴇᴅᴜᴄɪɴɢ ᴛʜᴇ ᴘᴏᴛᴇɴᴛɪᴀʟ ʟᴏꜱꜱᴇꜱ ᴏꜰ ʏᴏᴜʀ ɪɴᴠᴇꜱᴛᴍᴇɴᴛ ᴘᴏʀᴛꜰᴏʟɪᴏ ꜰʀᴏᴍ ᴄᴏɴᴄᴇɴᴛʀᴀᴛɪɴɢ ᴀʟʟ ʏᴏᴜʀ ᴄᴀᴘɪᴛᴀʟ ᴜɴᴅᴇʀ ᴏɴᴇ ᴛʏᴘᴇ ᴏꜰ ɪɴᴠᴇꜱᴛᴍᴇɴᴛ..
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Three key advantages of diversification include:
1. Minimising risk of loss – if one investment performs poorly over a certain period, other investments may perform better over that same period, reducing the potential losses of your investment portfolio from concentrating all your capital under one type of investment.
2. Preserving capital – not all investors are in the accumulation phase of life; some who are close to retirement have goals oriented towards preservation of capital, and diversification can help protect your savings.
3. Generating returns – sometimes investments don’t always perform as expected, by diversifying you’re not merely relying upon one source for income.
1. Minimising risk of loss – if one investment performs poorly over a certain period, other investments may perform better over that same period, reducing the potential losses of your investment portfolio from concentrating all your capital under one type of investment.
2. Preserving capital – not all investors are in the accumulation phase of life; some who are close to retirement have goals oriented towards preservation of capital, and diversification can help protect your savings.
3. Generating returns – sometimes investments don’t always perform as expected, by diversifying you’re not merely relying upon one source for income.
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