Diversifying your investment portfolio

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As a result of recent increased volatility within the stock market, investors are looking to diversify their portfolios, minimise risk and maximise opportunity. For those investors looking for something new, here are a few viable investment options for your portfolio.

Cash

Cash investments are short-term investments (less than 90 days) that are highly liquid in nature with a low rate of risk, relative to other modes of investment such as shares. They usually involve cash reserves such as saving accounts and term deposits. At the cost of low-risk levels, cash investments also offer low rates of returns due to low interest rates and its long-term nature (many cash investments and deposits include a fixed tenure).

Managed funds

A managed fund is a safe investment option as it is controlled on your behalf by a professional fund manager. Managed funds can focus on one asset class, for example, cash, or a combination of investment modes. Pooling your assets into a managed fund can be beneficial in that it is a diversified investment option in itself, while also based on the expertise of a professional. However, managed funds can be costly so it is important to consider whether you can afford to hire a fund manager, or do the research and invest directly yourself.

Property

Property investment is a growingly popular form of investment due to its stability and long-term gains. Although another costly type of investment, property offers you greater control as an investor due to the real estate market being less volatile than other classes such as shares or mutual funds. Investing in property may also be a practical option for individuals looking to live in said property, or create another stream of income through renting property out to tenants.

Evaluate risks versus benefits

Similar to investing in shares, there are both benefits and risks to cash, franchised companies and property. Always research your options beforehand and evaluate whether or not an investment option is suitable for your financial circumstances and timeline. For example, investors looking for long-term gain and stability may prefer property and real estate over cash.

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