To avoid any future shocks, investors should hedge risk by not putting all eggs in one basket or concentrate investment portfolio. To minimize risks and boost potential returns, always invest according to your investor profile in different product types, asset classes and industry sectors. This helps in managing systematic risk as different categories of investments respond to changing economic and political conditions in different ways. By including different asset classes in one’s portfolio, one increases the probability that some of their investments will provide satisfactory returns even if others are flat or losing value. A balanced portfolio should include several asset classes to reduce the risk of a downturn in one sector.
