Diversification Que...
Clear all

Diversification Question  



This one is mostly for our Admin, but I'd be interested in hearing the opinions of others as well.

I've got a friend who's just now getting interested in investing.  Not quite 40 years old and with a healthy appetite for risk.  He asked me what, on the surface of it, seemed like a pretty straightforward question.

In thinking about it though, I didn't have a good answer for him.

The question concerned diversification and percentage of asset allocation among different investment classes.  Broadly speaking, what percentage in stocks?  What percentage in CFDs, and what percentage in lower risk investments?

My first impulse was to simply say, "that depends on what your specific needs are and how long your investment horizon is" but ultimately, that's not a very satisfying answer.  Anybody have any more concrete advice than that?

Great question and no single answer fits all. Time is one aspect that affect each of us in different ways, I'm a little old, crusty and gnarly, but I'm still looking for growth rather than income. that said, trading CFDs would be 10% of my capital.

Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio. A diversified portfolio contains a mix of distinct asset types and investment vehicles in an attempt at limiting exposure to any single asset or risk.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.