Benefits of diversifying

16 Nov 2019

Diversifying has been proven to be an important factor in investing success AND mitigating risk. Diversifying gives you the ability to withstand shocks more easily and to limit the impact of when things aren't going your way for a particular property. Diversifying might include:

  1. Geographic location (States, suburbs and even countries)
  2. Type of property (Apartments vs houses
  3. Targeted demographic (Higher vs lower socio-economic)
  4. Value of property (owning one very expensive property vs several lower value properties)

For us, diversification brings peace of mind so that we can prevent the unnecessary worries that occur when a property becomes vacant for an extended period, because the income becomes a smaller component of total portfolio capital growth and income.

Furthermore, it limits the impacts of one-offs such as unexpected broken water heaters, malicious damage etc.

Diversification is an important tool for investors so they can manage risk and return.