Diversification (diversification) of capital.

When managing capital, there are many ways to protect it from possible risks; one of the most effective options is to diversify the distribution of funds.

Capital diversification is the rational distribution of the entire amount of available funds between different investment options. This takes into account not only the profitability of investment objects, but also the level of risk of such investments.

The main objective of capital diversification is to protect the investor from a complete loss of funds as a result of unforeseen events. In order to more fully understand the meaning of this term, let’s consider two areas of its application – Forex and investments.

Diversification of capital in relation to Forex trading.

The basic rule of money management is: “You can’t put all your eggs in one basket,” and it is from this principle that you should proceed when managing your funds when trading forex.

• To do this, you should not deposit more funds into the trader’s trading terminal account than is necessary for trading.

Yes, some brokers offer quite favorable interest rates on unused funds, but at the same time you risk losing everything. • If possible, it is better to open two small accounts with different brokers than one large one with one brokerage company.

• Permanent withdrawal of profits - immediately decide how much money you are trading with, and transfer the excess money to another account or withdraw it outside the company.

• When working under a trust management system, also distribute your funds between two, three, managers.

Diversification when making investments.

When choosing an investment source, we first determine the two most important indicators - risk and profitability of the investment.

For example.

Investments in precious metals - possible profitability of about 5-10% per year, minimum risk 1 on a 10-point scale.

Investment in real estate - return from 5 to 10 percent, risk of loss 1-2.

Deposit in a bank - annual return of 20% on a ten-point scale 2.

Investment funds - profitability of 30-50 percent, but a higher level of risk in the region 4.

Trust management in Forex - profit from 50 to 300 percent per annum, risk at the level 6-7.

Financial pyramids – the profitability of investments is up to several thousand per year, the risk is assessed as a maximum of 10 points.

Here is an approximate rating scale for the most common ways to invest funds.

After this, all you have to do is correctly distribute (diversify) the amount you have. Diversification works according to the following principle: the higher the investment risk, the lower the investment amount.

For example, you can distribute your funds as follows: Gold and deposits - 60% of all available money.
Investment funds – 30%.
Trust management – ​​10%.

It is desirable that there be at least three objects for capital investment.