The elementary of asset management－What are the benefits of diversification investment?

Investing sounds complicated!

You might be considering asset management for your future, maybe for retirement, purchasing a home, or raising children.

However, investment does seem difficult and scary, so you might be hesitant to take the first step.

But don't worry.

There are ways to invest in assets that even beginners can try.

Of the three pillars for asset management, long-term, accumulation, and diversification, this time I would like to tell you about diversification.

Diversification mitigates risk

No investment is completely risk-free.

You can lose money on investment.

However, while there is no risk-free investment, you can reduce its risk.

For example, instead of purchasing stocks worth 1,000,000 yen, you can diversify your investments by purchasing 500,000 yen in stocks and 500,000 yen in bonds to reduce the risk.

If stocks fall in price, bonds can be expected to rise in price, and conversely, if bonds decline, stocks can be expected to appreciate.

If you funnel your investment only to stocks, you will be directly affected by the price fluctuation. But if you diversify your asset into stocks and bonds, the range of price movements across the entire asset will be moderate.

It is as if in sports, each member of a team covers the shortcomings of other members to improve the team performance as a whole.

Diversification Works in Life

When it comes to assets, the vital thing is to have a combination of various property.

Instead of only having cash, you can have stocks, bonds, real estate, and gold.

If you have many different types of assets, even when one of them loses its value, the rest can remain unaffected.

Life is the same. It is better to diversify your life.

If you have as many “playing fields” as you can (e.g. not only your home, but also workplace, a gym, your favorite coffee shop, SNS), it helps you stabilize your life.

Among them, I recommend you to include Happy Note.

If you keep writing a note in Happy Note every day, it adds color to your life.

Basically, Happy Note is for personal use, but it can also connect people through the Internet.

Why don't you use Happy Note to add one more "playing field" to your life?

Writer – Ennui (An investor blogger, who has Level 2 mental disability and is studying money while treating his illness. He runs “Ennui's Money Blog”. Click here to visit his self-introduction page.)