{"id":13325,"date":"2024-09-10T07:54:06","date_gmt":"2024-09-10T07:54:06","guid":{"rendered":"https:\/\/www.vtmarkets.com\/blog\/?p=13325"},"modified":"2025-07-08T09:47:42","modified_gmt":"2025-07-08T09:47:42","slug":"how-to-build-a-diversified-portfolio","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.net\/pl\/learn\/how-to-build-a-diversified-portfolio\/","title":{"rendered":"How to build a diversified portfolio\u00a0"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/www.vtmarkets.com\/blog\/wp-content\/uploads\/sites\/11\/2024\/09\/shutterstock_2499212301-1024x576.jpg\" alt=\"\" class=\"wp-image-13327\" \/><\/figure>\n\n\n\n<p>Emotional discipline is one of the hardest things about the trading game. <\/p>\n\n\n\n<p>There\u2019s news going on if Bill Gates hadn&#8217;t diversified his portfolio and sold Microsoft shares, his fortune would be 1.33 trillion dollars today.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">After Bill Gates became friends with Warren Buffett, he began to diversify his portfolio and sold Microsoft shares.<br><br>Bill Gates&#39; fortune today is 138 billion dollars, if he hadn&#39;t diversified it would be 1.33 trillion dollars.<br><br>Be careful with diversification and with friends who\u2026 <a href=\"https:\/\/t.co\/7ZLT6NkgBS\">pic.twitter.com\/7ZLT6NkgBS<\/a><\/p>&mdash; Alex (@alex_avoigt) <a href=\"https:\/\/twitter.com\/alex_avoigt\/status\/1743757758334107902?ref_src=twsrc%5Etfw\">January 6, 2024<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Is diversification such a bad thing? It only is if you don\u2019t know what you\u2019re doing\u2014especially if you\u2019re a trader of FOMO or FOBI.&nbsp;<\/p>\n\n\n\n<p>This lack of emotional discipline typically shows up in one of two ways:&nbsp;<\/p>\n\n\n\n<p><strong>Fear of Missing Out (FOMO) in the market<\/strong>: For a teenager, FOMO is seeing their friends having fun without them on social media. For an investor, it\u2019s the thought, \u201cI see my neighbour making money on cryptocurrency, so I need to buy cryptocurrency.\u201d&nbsp;&nbsp;<\/p>\n\n\n\n<p>Someone with FOMO tends to follow the crowd. This mindset can lead an investor to measure their success by comparing their returns to others, rather than focusing on the returns needed to achieve their own financial goals&nbsp;<\/p>\n\n\n\n<p><strong>Fear of Being In (FOBI) the market<\/strong>: FOBI is the internal thought, \u201cI know how this story ends\u2014I need to sell my stocks.\u201d Someone with FOBI often listens to news sources that profit from pessimism. While it&#8217;s easy to hit the sell button, it&#8217;s much harder to know when to get back in.&nbsp;<br>&nbsp;<br>Do any of them sound like you?&nbsp;<\/p>\n\n\n\n<p>If you\u2019re more risk focused, you might be becoming a bit concerned by rising concentrations in your portfolio. &nbsp;<br>&nbsp;<br>Ignoring this issue could lead to worry and regret later on.&nbsp;<\/p>\n\n\n\n<p>A simple solution is to maintain a portfolio that is highly diversified across different markets, sectors, and company sizes\u2014from large to small.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Proper diversification can help us all overcome the FOMO (and FOBI) that we might feel.<\/strong>&nbsp;<\/h2>\n\n\n\n<p>Diversifying your portfolio is a great way for traders to keep their emotions in check. When you spread your investments across different areas, it helps you avoid the fear of missing out on the next big thing because you\u2019re already covering a lot of ground.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Plus, it also eases the worry about being stuck with a bad trade\u2014if one trade doesn\u2019t go well, it won\u2019t take down your entire portfolio since your money is spread out across different assets.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>How can diversification help manage risk and market volatility<\/strong>&nbsp;<\/h2>\n\n\n\n<p>Diversification can protect you against losses from a single investment failure or underperformance in one asset class, such as a drop in the stock market or issues with a fund manager.&nbsp;<\/p>\n\n\n\n<p>Say, you\u2019ve decided to start trading, and you know that your investments can rise or fall in value.&nbsp;<br>&nbsp;<br>Following the adage of \u201cDon\u2019t put all your eggs in one basket\u201d, you buy some stocks in a few companies. As things go well, you decide to mix in some forex trading. Finally, you toss in commodities as the finishing touch.&nbsp;<\/p>\n\n\n\n<p>Now, you\u2019ve got three key ingredients: stocks, forex, and commodities. Each of these can be broken down into smaller pieces\u2014different stocks, various currency pairs, and a mix of commodities like oil and gold. This helps to reduce the risk of a cracked nest egg.&nbsp;<\/p>\n\n\n\n<p><strong>While each investment is distinct, they all come together to create your portfolio<\/strong>\u2014the final cake. Just as every ingredient affects the taste of a cake, each investment impacts the overall success of your portfolio.&nbsp;<\/p>\n\n\n\n<p>Here&#8217;s a deeper look at what that means, as well as four tips to help you quickly diversify your portfolio.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Invest in variety of asset classes<\/strong>&nbsp;<\/h2>\n\n\n\n<ol start=\"1\" class=\"wp-block-list\">\n<li><\/li>\n<\/ol>\n\n\n\n<p>For example, just having a house, an investment property doesn\u2019t diversify your investments. If property values drop, you won\u2019t have other types of investments to balance out the loss. To diversify, you could invest in different types of assets like stocks or bonds.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Wondering what asset classes you could tap into to shield yourself from rising prices?<\/strong>&nbsp;<\/h2>\n\n\n\n<p>We\u2019ve written an article \u2013 and studied what Elon Musk thinks &#8211; on <a href=\"https:\/\/www.vtmarkets.net\/pl\/learn\/top-4-assets-to-inflation-proof-your-portfolio\/\" target=\"_blank\" rel=\"noopener\" title=\"\">top 4 assets to inflation-proof your portfolio <\/a>\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Diversify across different countries and regions<\/strong>&nbsp;<\/h2>\n\n\n\n<ol start=\"2\" class=\"wp-block-list\">\n<li><\/li>\n<\/ol>\n\n\n\n<p>Different markets are affected by different factors, so by investing in various regions, you\u2019re less likely to be hit hard if one market underperforms.&nbsp;<\/p>\n\n\n\n<p>Secondly, it can boost your returns. Since markets don\u2019t all move in sync, investing in different regions lets you take advantage of their varying performances, which can lead to better overall returns.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Spread risk across multiple sectors<\/strong>&nbsp;<\/h2>\n\n\n\n<ol start=\"3\" class=\"wp-block-list\">\n<li><\/li>\n<\/ol>\n\n\n\n<p>If there\u2019s one key lesson we\u2019ve learnt from the Covid-19 pandemic, it\u2019s to spread your investments across various sectors. This approach helps minimise the impact of downturns in any one industry and gives you the chance to benefit from growth in different segments of the economy. So, if you\u2019re mostly invested in one sector like tourism, consider also investing in other sectors such as healthcare, or technology.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Mix undervalued and high-growth stocks<\/strong>&nbsp;<\/h2>\n\n\n\n<ol start=\"4\" class=\"wp-block-list\">\n<li><\/li>\n<\/ol>\n\n\n\n<p>Incorporating both undervalued and high-growth stocks in your portfolio is a smart way to balance stability and potential rewards. Undervalued stocks offer steady returns and lower risk, while high-growth stocks provide the chance for significant gains but come with higher risk. By combining both, you can reduce overall risk while still benefiting from growth opportunities, creating a more balanced investment strategy.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\"><strong>Why should you diversify your portfolio with VT Markets<\/strong>&nbsp;<\/h2>\n\n\n\n<p>Diversifying your portfolio is made easy with CFDs (Contracts for Difference) because they allow you to trade a wide range of assets without owning the underlying asset. With CFDs, you can access global markets and trade various asset classes, including stocks, indices, commodities, forex, and cryptocurrencies\u2014all from a single account.&nbsp;<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/vtmarketsapp.onelink.me\/CD7D\/240525WA\" target=\"_blank\" rel=\"noreferrer noopener\">Start trading with VT Markets now<\/a>&nbsp;<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Emotional discipline is one of the hardest things about the trading game. Read the article to learn how effective diversification can help balance our investments and reduce emotional decision-making.\u00a0-vtmarkets.com<\/p>\n","protected":false},"author":2,"featured_media":13327,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7,26],"tags":[],"class_list":["post-13325","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-learn","category-trading-tips"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.net\/pl\/wp-json\/wp\/v2\/posts\/13325","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.net\/pl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.net\/pl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.net\/pl\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.net\/pl\/wp-json\/wp\/v2\/comments?post=13325"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.net\/pl\/wp-json\/wp\/v2\/posts\/13325\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.net\/pl\/wp-json\/wp\/v2\/media\/13327"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.net\/pl\/wp-json\/wp\/v2\/media?parent=13325"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.net\/pl\/wp-json\/wp\/v2\/categories?post=13325"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.net\/pl\/wp-json\/wp\/v2\/tags?post=13325"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}