Starting Slow & Diversification
In my previous post, I noted my holdings for the Two Roads Diverged Portfolio. At the top of the portfolio list is Yamana Gold (NYSE :AUY) at 19.15%. If this portfolio represented the sum total of all my investments, that would be totally unacceptable. There are too many risks to individual companies for one to concentrate their holdings in this way.
Even supposedly safe or even sacred companies can crater, never to recover their value. Look at Citigroup. Many would have considered that to be a very conservative, long-term investment just one year ago.
In my own investment portfolio, a 20% holding in Two Roads Diverged is equivalent to about 5% of my investment holdings, excluding real estate. At times, that may even be too much. I am split about 50/50 between individual stock holdings and mutual funds. This is largely because I do not have the time to follow enough stocks to provide adequate diversification.
Because this is a public portfolio, I think it is important for readers to understand that the Two Roads Diverged portfolio is not a totality but a important piece of my investment portfolio. Concentrating a portfolio of any substantial size to just eight stocks would not be a wise choice even for the most astute of investors. There are just too many potential issues that a company can face.
As I noted in my introduction to the Two Roads Diverged Portfolio, it began with an index funds plus a few strategy, and has grown as my confidence as an investor has grown. It was important for me to start slow, and it is always a good choice to hold diversified investments.
| Related Entries
|
