A portfolio needs five types of diversification: asset classes, geographic spread, time horizons, risk profiles, and multiple strategies. Most people only do the first one. True diversification is more complex than owning a few different things.
The 5 different types of diversification. The types of assets that we choose to accumulate in and also the sector in which they're located. Diversification number 2, geographical location. 2 reasons we do that is for the location for a market purpose and also jurisdiction. So we have more control and everything is not concentrated in one single jurisdiction. 3, time diversification. This is where we talk about the time horizon behind investments, but also liquidity points that we need in a portfolio. 4, risk. So we talk about the risk in terms of the profile of the asset class itself and the risk of having everything with one provider, for example. And then finally, strategy, talking about the 3 different strategies that every portfolio needs to have in a portfolio at any point in time. So rather than having everything just, you know, people think about diversification, just diversification of, oh, I'm going to buy some property and buy some shares or buy a bit of crypto. It's so limited compared to what's actually needed in terms of the overarching strategy behind your portfolio.
