Todd PolkeInvestment Strategist l Wealth Coach l Speaker, Todd Polke · Investment Strategist l Helping Investors and Business Owners grow their Wealth Faster

What is the purpose of diversifying? #shorts #australia #investing #finance

1 Aug 2024 · 1 min

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In this short video, the speaker explains that diversification should be driven by a clear purpose, not pursued merely for its own sake. He warns against the common mistake of going all‑in on cryptocurrency, highlighting its extreme volatility and lack of stability as a relatively new asset class. The speaker emphasizes that such concentration can cause rapid swings in wealth. Instead, he advocates building a structured, purpose‑aligned portfolio that includes a range of targeted asset classes, each selected to serve a specific role, thereby avoiding the pitfalls of diversification for diversity’s sake.

Chapters

When we're talking about the different type of assets classes, what the question you've got to be asking yourself, well, why are we diversifying? What is the purpose of diversifying? And we want to make sure that again, we're not diversifying for diversity's sake. Now, I saw a lot of people make the mistake in this world in cryptocurrency. They got excited about crypto and they went all in on crypto. And then because they were all in on crypto, it meant they were riding the ups and downs of the crypto market, which is a bloody rollercoaster ride, right? Like, you know, one day it can be up 10%, next day it can be down 20% and up 20%. Like, this is crazy, you know? Yeah. So if you're all in on the world of cryptocurrency, you could see your wealth go up and go down in rapid ways. And because it's such a relatively new asset class, it doesn't have the stability behind it, right? And I've seen a lot of people make the mistake when it comes to the world of cryptocurrency. So what we want to focus on doing is how do we start to build a diverse structured portfolio over targeted assets which are there to serve the right purpose in a portfolio? And we never diversify for diversity's sake.