Diversify

You've seen the headlines - 'Aussie shares down', or 'Property prices soar'. Asset classes tend to follow trends, so if you have all your assets in the one asset class, then you are open to the market's rises and falls. That's why experts recommend that you spread your investments to smooth out the risks.

Diversifying protects you against volatility

Improve returns	Spread risk	Consider managed funds

We'd all like to be able to pick the investment that's going to perform best each year. However, markets are unpredictable.

One solution is to diversify. When you are diversified the value of your investment portfolio won't be catastrophically affected by a drop in value of a single share. But remember not to spread yourself too thin - seek expert advice on the optimum way to diversify.

Why you should avoid chasing returns.

Would you like to invest in assets that offer higher potential returns, but are worried by the higher risk? Everyone has a level of risk they feel comfortable with. There are a number of strategies you can use to reduce risk. Take our simple test to analyse your own risk profile.

Try BT's Risk Profiler tool.

Managed funds offer a short-cut to diversification. By pooling your money with that of many other investors, managed funds have the buying power to invest in many different asset classes and industry sectors. This means you have access to the benefits of diversification, even if you only invest the minimum amount. Plus your investment will be managed by experts, giving you peace of mind and further reducing your risk.

Check out our 'Managed funds' section.

Find out more about investment

Download a copy of Investing Truths (PDF, 279 KB) (opens a new window).
Find a financial adviser using BT's Adviser Referral Program.
Learn about BT's Investment funds.