5 Investment Mistakes to Avoid in 2012
3. Restricted Diversification
Sometimes we get so carried away with the name, brand and past performance of a company that we fail to give an equal chance to other promising firms. When we place all our eggs in 1 basket, we face extremes of an investment – excellent investment or a very pathetic one. When it comes to investing, choosing the middle path is the best unless you are a big player. Restricted diversification curtails our full investment potential. As diversification is mandatory, one can diversify in 2 ways. First - go for the same type of investment in more than 1 firm. Second - go for various financial products under the same firm. This ensures better returns from remaining sources even if one fails. Also, try and have a good ratio of stocks and bonds. Plus, do not have more than 10 – 15 percent of your investment in a single stock of a company.
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