Diversified investment

Target diversification

• Diversified investment refers to investment in several products instead of one product.
• Through diversified investment, losses in some investments can be covered by profit in others,
  reducing overall risk.

Investment period diversification

• This refers to diversifying the investment period.
• The ‘cost averaging method’ is an effective way of diversifying the investment period
  Cost Averaging Method: investing the same amount each period, thus purchasing more assets when the price is low and ultimately maintaining a low average purchasing cost

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Long-term investment

Long-term investment

• Like stocks, over the short term sharp price increases and decreases cause significant price fluctuations. Over the long term, however, prices increase steadily. This means that it is important for investors to focus on long-term prospects.

Compound interest effect

• Compound interest effect can be described as ‘interest on interest’
• With financial products, this refers to the accelerating rate of profit increase among long-term investments