Nowadays, making an investment portfolio and diversifying it is the most effective way to earn profits on trading platforms. An investor or financial manager must consider several aspects to make this portfolio profitable. For example, it is necessary to make well-thought-out decisions based on the goals of the investor and not just put cash in random assets.
The concept of a diversified investment portfolio has characteristics that make it better and more profitable than single investments. What are they, and how can you use them? To figure this out, first, you need to choose a reliable broker, like DotBig exchange.
Diversification of the Investment Portfolio Briefly
Investing is one of the best ways to earn additional funds, increase capital, and achieve long-term financial goals. But for investments to be successful, it is crucial to choose the right assets and create a diversified investment portfolio.
It is a common investment strategy by which investors fill their portfolios with various types of securities and asset classes to increase capital and reduce the risk of losses due to market volatility.
Allocating assets and risks in such a way as to create the best combination of assets with different returns and degrees of risk is the main task of portfolio diversification. For example, the user knows that stocks always generate more income than bonds. Thus, he can invest in stocks of companies to generate high income and in bonds to stabilize profits.
The main rule of diversification is to include assets in your portfolio whose profitability does not correlate with each other. Thus, if any news can affect your investments, then it either affects part of the portfolio, does not affect it at all, or has the opposite effect on another part of the investment.
There are several types of investment portfolio diversification:
- By type of assets
- By sectors of the economy
- Within the same asset class
- By country
- By currency
Diversification is crucial for conscious and safe investment. The correct allocation of assets in the investment portfolio will bring a positive impact on the dynamics of profitability and protect the investor in case of a fall in a certain market segment.
Portfolio with investments from Dotbig
When a user invests in stocks with DotBig exchange, he can choose two different options: direct or portfolio investments. The idea of indirect investments seems attractive to many traders because in this way they can receive both long-term and short-term income.
With portfolio investments, the user puts money in several assets, which reduces the risk. At the same time, the depositor can count on a large potential profit.
An investment portfolio is a kind of index, a set of stocks of various companies. A portfolio of securities can be aggressive and conservative.
The first option involves increased risk and brings a large profit to the investor, therefore it is suitable for traders who are willing to take risks and can calmly perceive significant fluctuations in the exchange rate. A conservative portfolio is less risky and profitable.
The long-term portfolio is focused on fixed income and often includes bonds with a maturity of 5 years or more. One can also choose a balanced set of securities consisting of various assets.
Through the DotBig broker, investors can trade assets in the Asian, American, and European financial markets. One of the features of this broker is a multi-active account. You can make a single deposit and use these funds to trade various financial instruments without opening multiple accounts.
There are several asset classes available to DotBig Forex clients:
- Stocks. Securities are usually traded on stock exchanges and are known for their potential to increase capital. Through the DotBig broker, you can trade shares of the world’s largest companies (Apple, Amazon, Nvidia, Netflix, etc.). Stock market assets also include indices and ETFs;
- Cryptocurrencies. Digital assets are known for their high volatility and ability to generate significant income. You can trade Bitcoin, Ethereum, Teather, Litecoin, and other crypto assets, as well as conduct transactions for depositing and withdrawing funds in cryptocurrencies;
- Raw materials. This group of assets includes tangible assets such as gold, oil, agricultural products, and metals. Investors often trade commodity futures contracts to speculate on price changes.;
- Currency pairs. One can trade currency pairs to make profits when exchange rates change.
CFDs are another popular investment instrument. These are contracts for the difference in asset prices, which allow you to profit from the difference in the value of the selected financial instrument at the time of conclusion and closing of the transaction. CFD contracts can be used in various financial markets: stock, currency, commodity, and digital money.
Benefits of Trading with DotBig
Making portfolio investments can be a complicated task. However, one can improve it by trusting the professionals. For example, when trading with DotBig, the company’s experts will help novice users choose the most promising securities. The choice of financial products is wide enough to include various asset classes in the investment portfolio.
Among the advantages of DotBig trading platform for investors are these things:
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- instant order processing;
- the possibility of depositing and withdrawing funds in cryptocurrency;
- low spread from 0 points;
- availability of training materials for novice traders;
- there is a platform for copy trading;
- the ability to trade on financial markets through trading advisors.
To find out more about the broker, study DotBig reviews on verified sites. Among other things, traders note the convenient trading conditions and the good work of the technical support service.