Diversifying the Portfolio

Diversifying your investment portfolio not only allows you to be involved with a number of opportunities but also allows you to spread risk and optimize your returns.
In order to successfully diversify your portfolio, think about opportunities or companies that compliment each other rather than being similar to each other. If you wanted to eat more fruit, you would not just stick to green and red apples; you would likely choose a range of fruits that went well together. Diversification is in much the same vein. Also, it is advisable to invest in companies from a range of different industries at various stages of inception and that have different risk profiles to avoid putting all your eggs in one basket.
By mixing established opportunities with new ones, you are able to create a balanced portfolio with more chances for growth. Stable investments in mature companies can provide a solid foundation, while investments in innovative startups can offer high potential.
A rule of thumb is to have at least 10-20 different holdings to achieve good risk diversification. However, it is important to listen to your instincts. As we all have different tastes, an optimal mix depends on personal goals, risks and expertise.
Building a diversified portfolio is not a one-time task but an ongoing process. You should monitor and adjust your holdings as the market and companies evolve. Such a process allows you to keep your portfolio fresh and exciting.