Having a lot of funds in your portfolio doesn't necessarily mean that your portfolio is more diversified. And it certainly doesn't mean that it will perform better either. Sometimes, keeping your portfolio simple is the best way to invest. And monitoring it will be less of a hassle too.
1) Get exposure to the key regions
The key regions are Asia ex Japan, Japan, Europe, US, and emerging markets. These regions should form the core of your portfolio. There is actually no need for thematic funds like climate change, agribusiness etc unless your portfolio is big enough, or if you are a more experienced investor.
To a certain extent, even single country funds can be excluded from a portfolio, especially if your portfolio size is small. For very small portfolios, investing into a global equity or global balanced fund is the fastest and easiest way to diversify your portfolio and gain exposure globally.
2) Diversify
Many investors think that fixed income funds are boring and leave them out of their portfolios. While their lower returns are nowhere as exciting as equity funds, they actually help to reduce the overall volatility of your portfolio. Fixed income funds are liquid and offer returns that are higher than bank savings deposits or fixed deposits, but with an acceptable increase in risk. If you have short term goals approaching, invest more into fixed income funds.
3) Invest regularly
Committing a fixed amount into your portfolio every month via a RSP (Regular Savings Plan) is a good way of maintaining discipline. The benefits of Dollar Cost Averaging have already been stated time and time again, so I won't repeat them here.
If you have a longer time horizon, it is better to invest your RSP into an equity fund. If you have a shorter time horizon or if you are unsure about which equity funds to go into, there is no harm committing to a bond fund for your RSP too.
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