We all know that investing is fraught with risks, especially investing and holding assets classes like shares involve higher risks. The risk becomes even greater if excessive investment is done in a single stock. In order to mitigate this risk of holding an asset especially shares, diversification is the key. It is also prudent to diversify only to an extent where WE are in control and we consciously know ABOUT each and every investment we own. During the course of investing, in the name of diversification, when we invest in a number of varied businesses/investments resembling a crowd, WE tend to lose focus on EACH & EVERY investment and it becomes difficult for us to monitor. An investment portfolio to be successful for an individual, includes focusing/monitoring his business/ investments. But, if these numbers are not in control, it becomes a crowd rather than the cream. That doesn’t mean that crowd is trash. It is very important for us to make use of the crowd as well. As far as investing/holding of shares are concerned, in order to mitigate the risks, I do also invest in a crowd, but in a single format. And that is the Index. Apart from some shares, I have invested in the Sensex, Nifty50, NiftyNext50 & Low Volatility 30 ETFs in different proportions. That’s how I have made a crowd to a cream 🙂
Excessive holding of a single stock/asset in our investment portfolio, places us at it’s mercy, but freedom is ours if we own a reasonable diversified portfolio under our control. Choose wisely!