Investment diversification

Investment Diversification
Student’s Name
Course Number and Name
Name of Institution
Name of Instructor
Date of Submission

Investment Diversification
People invest their current surplus earnings to reap profits in the future. There are various kinds of investments. In the same manner, multiple rules guide and inform investment approaches. Diversification is one of the central principles to govern people with many investment interests. The doctrine of diversification discourages investors against concentrating their investments in one area such as an industry, a bond, stock, or country (Duarte, 2014; Hirt, Block & Basu, 2006). The principle urges individuals to spread their capital in different sectors and fields. The need for diversification is to cushion investors from adverse effects and shocks if economic conditions disfavor a given area of investment.
Mutual funds constitute one area of investment. The capital investment into the program can buy or acquire various assets like bonds, stock, and securities among others. The primary challenge with such an investment is that a professional pools money from different people and sources and invests in manners they deem best (Dogu, 2011). Nonetheless, mutual fund companies spend the money they gather in various areas and industries (Hirt, Back & Basu, 2006). As such, investing even in a single mutual fund can offer someone sufficient diversification (Dogu, 2011). In the case, the client has diversified investments because of having the six growth mutual funds.

By all means, the mutual funds will offer diversification opportunities.
The mutual funds invested by the client (aged 32) can offer proper framework for retirement saving. However, real diversification is unachievable if they do not express their desires regarding the allocation of their funds. This statement means that the client would not achieve proper diversification if the fund managers targeted one area. In that line, it is necessary for the client to direct the fund managers inject the money contributed into distinct areas to achieve proper diversification (Duarte, 2014). By so doing, the client can realize efficient spreading of investment even with the six growth mutual funds.

References
Dogu, L. How to Diversify with Just Three Mutual Funds. Retrieved January 23, 2018 from https://www.forbes.com/sites/thebogleheadsview/2011/01/28/three-funds-to-own-now/#219791c221dc
Duarte, J. (2014). The everything investing in your 20s and 30s book: Learn how to manage your money and start investing for your future now! Avon, Massachusetts; MA: Adams Media.
Hirt, G.A., Block, S.B., & Basu, S. (2006). Investment planning for financial professionals. NewYork: McGraw-Hill.