In the investment market, investors should not put their eggs in one basket, but buy more wealth management products to spread risks. However, this does not mean that diversification will not lead to losses? Why is this? The following small series has prepared the main purpose of fund diversification for your reference.

The main purpose of fund diversification investment

The main purpose of fund diversification is to reduce risks and increase the stability of portfolio. By diversifying the investment into different asset classes, industries, regions and individual stocks, the impact of the risk of a single investment on the entire portfolio can be minimized.

Fund investment mode

Asset allocation: according to the risk tolerance and investment objectives, allocate funds to different asset categories, such as stocks, bonds, money market instruments and other assets. Through the allocation between different asset classes, we can achieve the purpose of diversifying risks and pursuing long-term returns.

Diversification of industries: invest funds in different industries to reduce the impact of specific industry risks on the portfolio. By choosing funds from different industries, you can participate in the growth and development of different economic fields.

Geographical dispersion: dispersing funds into funds in different countries or regions can reduce geographical risks. Different countries or regions have different economic and market environments, so global investment can achieve better risk diversification effect.

Diversification of funds: Choosing to invest in multiple funds can further diversify the portfolio. Choosing different types and risk levels of funds can ensure stable returns in different market environments.

The reason why diversification also loses money

1, the investment is too scattered.

For many investors, diversification means diversifying their assets as much as possible, simply dividing the assets into n shares, and putting the same money into each fund, stock and other financial assets, only considering the number of assets, regardless of their own experience and operational level, which is inevitably "overkill".

At the same time, a large amount will also increase the burden on investors, who don't have so much energy to take care of it. It seems that when investors diversify their investments, it is best not to buy more than five wealth management products and rationally allocate positions among wealth management products. For funds that are hot in the market, the position is heavy, but it cannot exceed 50% of the position.

2. All investments are related products.

Although investors will not spend all their money on one wealth management product and diversify their investments in a variety of wealth management products, all wealth management products are in the same industry, or have a strong correlation, which cannot spread risks, that is, when the whole industry is not good, the wealth management products purchased by investors will show a simultaneous downward trend, which will make investors suffer heavy losses.

3. The market is depressed.

In the case of bad market conditions, the performance of wealth management products in the whole market is poor, that is, the basket is poor. At this point, investors will also lose money by diversifying their assets into multiple wealth management products. However, compared with buying all their funds for a real estate product, the loss may be smaller.

The fund's main sources of income are as follows:

Stock investment income: Stock funds pursue the capital appreciation and dividend income of stocks by investing in the stock market.

Bond investment income: bond funds pursue bond interest and bond price increase by investing in the bond market.

Cash interest income: Money market funds pursue cash interest income by investing in low-risk financial instruments, such as deposits and short-term bonds.

Dividend income: Dividend income paid by stocks or bonds held by the fund is also a part of the fund's income source.

Why is diversification also a loss?

Multiple baskets are likely to be one basket.

Most investors who have little knowledge of investment have invested in many financial platforms, but in fact they can only be regarded as investing in one. The core of diversified investment is not that the more investment platforms, the better. If you invest in a pile of garbage platforms, it is better to operate for many years and have a platform with risk control capability, and the risk is lower. The real diversification focuses on the differentiation of platform selection, and diversified investment is made from various aspects such as platform type and income period.

Why don't you put your eggs in a basket?

This is about asset allocation. Using the risk differences between different assets can reduce the overall risk and reduce the volatility of the portfolio.

For example:

If yes, you have 6,543,800 yuan, bought 50,000 stock funds and 50,000 bond funds.

A year later, the stock fund lost 50% and the bond fund earned 5%. Your 654.38+ million has become 77500, but if you buy a stock fund at the beginning, then 654.38+ million is only 50,000.

In the second year, the stock fund earned 60% and the bond fund earned 4%. Your 77500 has become 94600. If you buy all the stocks of that year, the remaining 50 thousand from the previous year will become 80 thousand this year.

In the third year, the stock fund income 10% and the bond fund income 5%. If you buy half of it, it will become 10. 1.33 million now, and the stock fund will be 88,000 in the third year.

The biggest role of asset allocation is that when the market fluctuates, you can lose less money and return to your capital quickly.

Too many baskets will affect management efficiency.

If a person uses money to buy stocks, stock funds and private placements, it seems that the investment portfolio is very rich, but the investment products are equity assets, and the income is too dependent on the stock market, which is very risky.

Others know that they want to buy products with low relevance, but they can't control it. From the perspective of management cost, too many baskets will affect your management efficiency and even reduce the profit margin. Moreover, many citizens themselves are half-baked, learning things by halves, and they don't have enough ability and solid investment knowledge. If they buy in buy buy on purpose, they may lose more than they gain.