‘You can’t have the best of both worlds’,‘Pick one, you can’t have both of them together’ are phrases that used to ring in my ears as I was growing up, particularly when I was in the chocolate and sweets section of my local shop!
This is something that does applies to many things in life, in particular business. However it does not apply to investments. Having the best of both worlds is a key principle that is taught right from the beginning as you learn more about investments. It is also known as ‘diversification’. This is important as it means spreading the risk across all of your investments. For example, if you had £10,000 in banking shares and the banks fell into rough times (again!) then your £10,000 is at risk. Whereas if that £10,000 was spread equally across numerous different sectors and asset classes, for example £2,000 in; banking, housing, utilities, foreign exchange and cash, then the money would be well diversified to help cover the hit on the banking shares.
This is why we have implemented our Subsription Xtra service meaning our subscribers can benefit from the best of both worlds. Whilst diversifying your share portfolio in different sectors is effective, another great way to hedge is by investing into the foreign exchange (forex) market.
What does ‘hedge’ mean? Apart from being the big bush in your garden, it is another term for diversifying. If you hedge your risk, you lower it by investing in other assets. For example, if you were directly in shares in 2007/08 then your portfolio would’ve taken a downturn. However, if you had a section of your portfolio in the forex market then you could’ve taken a short position(trading on the asset to go down) on the sterling which would’ve been profitable and would’ve covered some of the losses your share portfolio was making.
Therefore at InvestmentWatch UK, we encourage you to have the best of both worlds. For the sake of an extra £15 per month from the normal stocks plus subscription, you can benefit from the further diversification benefits which will help to lower the risk level, yet increase the profit potential on your portfolio. All this for less than 50p a day!