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Once you have determined your investor profile, you will be able to properly diversify your portfolio.
Your diversified investment portfolio will have an asset mix that corresponds to your risk tolerance level. For example, you could have 50% of your portfolio in bonds, 30% in stocks and 20% in liquid assets. The asset mix depends on the type of investor you are: conservative, moderate, audacious or ambitious.
However, market changes can bring about adjustments to your portfolio asset mix. For instance, in a rising equity market, your stocks will soon exceed the initial 30% share of your portfolio.
Similarly, the value of your bonds can fall below the initial 50% share of your portfolio.
In such an event, you need to rebalance your portfolio in order to restore the initial asset mix. You will thus be able to conserve your gains and maintain an acceptable level of risk.
Investors are usually advised to rebalance their portfolios annually. This is essential for fulfilling your investment strategy.
If you opt for either the Diapason or the Diapason Retirement program, their predefined portfolios make it simpler to choose an investment that really fits your profile.
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