What Is Diversification?

Diversification is the act of spreading your money through different assets to assure that you will not lose all of your money if one your investments goes wrong. These assets can for instances be banks, crowdlending platforms, stock market, ETFs, a Shopify business, and many more other types of investment.

When thinking about which of those places you want to put your money in, you should always study as best as possible all the possible outcomes.

There’s no point in leaving your money rotting in the bank with taxes lower than 1%, no matter how safety is may seem. It is also non-sense to spread your money into stocks if you have no knowledge of it. You should ALWAYS invest your money in something you understand and TRUST. Do not make the same mistakes I did. If you’ve already done them, it’s ok, simply keep the right mindset and you’ll achieve your dreams as well.

How Can You Diversify In A Sustainable Manner?

In case you’re still wondering that banks are safer and that you don’t feel like risking, I’ll give you one example that happened in my country, Portugal. There was a bank called Banco Espírito Santo which seemed to be a trustworthy and good bank. Guess what happened? It went bankrupt due to the misconduct of their owners and thousands of people lost their savings of a lifetime!

If they had diversified before, the damages to their lives wouldn’t be so big. Sure, they would still have lost some amount, but NOT ALL.

That is why, as I’ve stated in my mission, I’m investing in crowdlending platforms. If you want to understand better about this kind of investment, please read my post about peer-to-peer platforms (or crowdlending). Make sure to invest only in platforms that are regulated and have supervision from a legal entity.

These companies are offering a minimum annual net interest rate of 12%. With this value, pretty much anyone can achieve financial freedom if they keep good habits throughout the years. Remember also that by reinvesting the returns from these investments, you’ll have another great force helping you: compound interest. In my case, I’ll need more or less 10 years to be financially free (I’ll work to be less). What about you? You can use a compound interest calculator to find out.

Why Is Diversification So Important?

Diversification is crucial if you don’t want to lose all of your money at once. As safe as one company may seem, history has proven that it is not safe to keep all of your savings in one place. Yet, this is what most people do.

I truly hope you took some value from this post and understood that it is of great importance to diversify your portfolio.

I told you about crowdlending platforms since it is what I understand and feel comfortable with. But time has taught me that things are all the time changing. Later, there can appear something better (or already exists and I’m not aware of). The most important thing to keep in mind is that you understand the concept of diversification.

If you hadn’t before, start today your journey to financial freedom with me. If others can, so do we.

How Am I Diversifying My Portfolio?

Nowadays I am diversifying my portfolio through Crowdlending platforms but I expect to initiate on other types of investments soon and write about them as well.

Some of my P2P reviews:

Books

Read the list of books that are helping me have the right mindset by clicking here.


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