What are the benefits of portfolio diversification, such as by opening a managed Forex account in addition to my other investments?
A. Here are some reasons to diversify. 1) Investment advisors have always advocated diversification. 2) Most investor portfolios are heavily concentrated in the stock market and or bond market. 3) Most of the 8,000 mutual funds are highly correlated to each other and the market. 4) Protecting yourself from the risks associated with investment concentration is important to your financial well being. 5) Forex is not correlated to the stock market, so it provides true diversification to lower your overall investment portfolio risk. 6) Forex offers profit/loss potential regardless of market direction, unlike some other markets (no “Bear” Market).
