[Summary]
Diversification is a basic strategy for reducing risk. However, "blind diversification" has the opposite effect. In this article, we will explain the correct way of thinking about dispersion and how to put it into practice.
What is diversified investment?
Conclusion: A method to reduce risk by dividing assets into multiple parts.
One word explanation: Diversified investment = “Don’t concentrate on one thing”
Detailed explanation:
- Hold not only stocks but also bonds
- Invest not only in Japan but also overseas
- Invest at different times (accumulation)
Why is dispersion important?
Conclusion: Loss fluctuations can be reduced.
Reason: By combining assets with different price movements, The decline in one is covered by the other.
Specific example:
- Stocks fall → Bonds stabilize
- Japan is sluggish → overseas is growing
Summary: Reduce the risk of "everything going down at the same time".
Three axes of dispersion
Conclusion: Consider diversification in terms of assets, region, and time.
① Asset diversification
- stocks
- bond
- cash
→ Take advantage of differences in price movements
② Regional dispersion
- Japan
- united states
- emerging countries
→ Take advantage of differences in economic growth
③ Time distribution
- Lump-sum investment
- accumulated investment
→ Prevent high price grabbing
common misconceptions
- It is safe if it is distributed → × (losses will occur)
- The more the better → × (difficult to manage)
- Return decreases → △ (stable)
Advantages and disadvantages
| Item | Content |
|---|---|
| Benefits | Reduce risk and improve stability |
| Disadvantages | Hard to make big profits |
How to use it in practice
Conclusion: Simple distribution is sufficient.
Specific actions:
- Utilize investment trusts with global stocks
- Incorporate some bonds
- Continue to save every month
For intermediate users:
- Core: widely distributed assets
- Satellite: Specific theme investment
Summary
- Diversification is the basis of risk management
- Think in terms of “assets, region, and time”
- Best to start simple
Action: First, experience diversification with “Worldwide + Savings”