MAXIMISE YOUR MONEY
5-DAY CHALLENGE
SORTED MONEY MONTH
1 – 31 AUGUST 2023
Maximise your money in your 40s: 14 – 18 August
Day 4: Diversify your investments
As you enter your 40s, your financial priorities often shift towards long-term stability and securing your future. One of the most crucial strategies for achieving these goals is to diversify your investment portfolio to reduce risk while optimising potential returns.
Challenge yourself to spread your investments with these top tips from our expert financial adviser Michelle Cook:
What does it mean to diversify your investments?
Diversifying your investments is simply spreading your assets across a mix of investments, such as bonds, shares, managed funds and property. This avoids the risk of losing funds if a single investment doesn’t do so well. Essentially, it’s about not putting all your eggs in one basket. Each investment type carries its own risk and return characteristics. By spreading your investments across them, you can reduce the impact of market volatility on your overall portfolio. This enhances your ability to weather economic downturns and potentially maximize returns.
Assess your risk tolerance and financial goals
It is important to understand your risk tolerance and financial objectives and take these into account in your diversification strategy. Different individuals have varying levels of risk appetite, and factors such as age, financial responsibilities, and retirement plans play a significant role in determining your optimal investment mix. Generally, individuals in their 40s may have a higher risk tolerance than those nearing retirement, as they have more time to recover from market fluctuations, so their investment diversification strategy may look quite different.
Regularly review your portfolio
Review your portfolio regularly to ensure you have a well-balanced portfolio that aligns with your risk tolerance and financial goals.
Seek professional advice
Consider consulting a financial advisor to create a customized investment strategy that aligns with your risk profile and financial goals. While diversification does not guarantee profits, it can enhance your portfolio’s stability and position you for long-term financial success. With a well-diversified portfolio and a solid financial plan, you are better placed to navigate the complexities of the financial markets and achieve your desired financial outcomes.
Top tips contributed by:
Michelle Cook | Financial Adviser
GradDip Professional Financial Planning
Ph 027 270 4490 michelle.cook@sharenz.com
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