Time diversification means spreading your money across investments with different time horizons and liquidity levels. Many investors are caught in a serviceability crunch with equity locked up and no liquid assets. Build a portfolio that covers both short-term needs and long-term holdings to reduce risk.
The third type of diversification is time diversification. Now there's 2 different parts to this again. One is the time horizon. Now what I mean by that is, what's the time horizon in why you're buying and holding a certain asset, right? Is it a short-term asset for a certain purpose? When we talk about strategy, that's where I talk about like a momentum style strategy, right? Or is it a longer-term strategy where we might be talking about buying gold or maybe a paycheck style strategy? And so one of the other big things associated with that is liquidity. Liquidity is one of the most underrated elements associated to investing. And especially now, right? Especially with the serviceability crunch that we have right now, which isn't going away, it's staying, it's here to stay, by the way, team. And a lot of people have a lot of equity tied up and they're not liquid. And so when you're building a portfolio, what you want to focus on doing is having different elements within your portfolio with different time horizons and different liquidity points.
