Diversification. Why does it matter?

Diversification. Why does it matter?

Investing is one of the most valuable ways to feel secure about your financial future. Before making any investment, one undeniable principle must guide you: continuously diversify your investments. Diversification means owning various assets that usually perform differently over time. However, it does not guarantee against loss, but diversification is definitely minimizing the risk.

The importance of diversification

Diversifying investments is essential because not all investments carry the same risk. Additionally, the recent social and economic events have taught us that we must be careful and diversify our investments. By doing it correctly, we can be sure that if one investment is down, the entire portfolio isn't necessarily down; you may still earn a return and end up with a weighted average of the returns of assets.

What's additionally important nowadays, diversifying your investments will help to manage inflation risk. When consumer prices rise, purchasing power shrinks. Thus, everybody needs to manage risk in such an unpredictable environment.

The basic principle of diversification

The primary way to diversify your portfolio is to spread your money among different asset classes. Additionally, allocate those funds within other types of thoses classes. For instance, you might also invest in p2p platforms, bonds, and real estate, rather than only investing in stocks. Accordingly, if you choose to invest on p2p platform, we recommend choosing business and real estate loans rather than investing only in personal loans.

How to diversify with "Hive5"?

If you prefer investing only in stocks, alternative investments can benefit your portfolio because of the high complementarity with other traditional investments. Besides, we are doing our best to give you the possibility of broad diversification on our platform. With the Auto Invest feature, you can easily automate your investment across various notes on "Hive5". Select an Auto Invest profile according to your risk appetite.

In the nearest future, we will offer many different types of loans. In fact, all the different loan types carry other risks across many business sectors. Also, it can create significant diversification. Keep in mind that there are many ways of diversifying: across different countries, amount of loans, returns of investment, various industries (for business loans) and many other factors.

To sum up

In conclusion, remaining diversified is a superb investment strategy. More importantly, it can drive incredible returns in the long term and offer investors excellent protection against risk during that time. Thus, be a wise investor and always diversify.

Recommended articles
Our reliable risk management tools
Investment, Insights  ·  24.04.2023
Our reliable risk management tools

Every day, hundreds of thousands of people invest money through different P2P platforms in return…

More than 6 million euros funded loans since inception!
Investment  ·  19.04.2023
More than 6 million euros funded loans since inception!

We are delighted to share that hive5 has achieved another milestone - we have surpassed … 6 000…

What do investors like the most about hive5?
Investment  ·  14.04.2023
What do investors like the most about hive5?

More and more people realise the benefits of investing. Accordingly, the recent trend is investing…

This website uses cookies

You can choose which types of cookies to accept. Some are always used as they are necessary for the website to function. Read more about Privacy Policy.

This website uses cookies

You can choose which types of cookies to accept. Some are always used as they are necessary for the website to function. Read more about Privacy Policy.

Your cookie preferences have been saved