Self-managed super funds (SMSFs) are becoming increasingly popular, and for good reason. They offer a range of benefits, such as the ability to manage your own investments and make decisions that best benefit you. However, one of the most important aspects of SMSFs is diversification. In other words, don’t put all your eggs in one basket! Let’s take a look at how diversifying your investments can help you get the most out of your super fund.
Why Diversify Your Investments?
Diversification means spreading your investments across different asset classes and sectors. This helps to reduce risk by ensuring that if one investment loses money, it won’t affect the others too much. In addition, it also helps to ensure that you are not putting all your eggs in one basket – if something bad happens to one investment, you have other options to turn to.
How Do You Diversify?
When it comes to diversifying your investments, there are several methods you can use. The first is asset class diversification – this involves investing in different asset classes such as shares, property and cash so that if one type of investment takes a hit, the others will be unaffected. The second method is sector diversification – this involves investing in different sectors such as technology or healthcare so that if one sector starts to decline, you still have other options available.
In conclusion, when it comes to self-managed super funds, diversification is key! By spreading your investments across different asset classes and sectors, you can reduce any potential risk. Taking the time to properly research and understand which investments best suit your needs will help ensure that you make sound decisions when it comes to SMSF’s and getting the most out of them! So don’t forget – when it comes to self-managed super funds – “don’t put all your eggs in one basket!”
