In the world of investing, having a resilient portfolio is crucial for long term financial success. One key way to build a resilient portfolio is through diversification. By spreading your investments across a variety of asset classes, industries, and geographical regions, you can reduce the risk of your portfolio being impacted by a single event or economic downturn.
But diversification alone is not enough. Another important factor in building a resilient portfolio is minimizing fees. Fees can eat into your returns over time, so it's important to be mindful of how much you are paying in fees and to look for ways to lower them.
One way to lower fees is to choose low cost index funds or exchange traded funds (ETFs) instead of actively managed mutual funds. Index funds and ETFs typically have lower expense ratios than actively managed funds, which can save you money in the long run. Additionally, by choosing funds with lower fees, you can potentially increase your overall returns over time.
Another way to lower fees is to be mindful of trading costs. Buying and selling investments can come with fees, so it's important to minimize the number of trades you make and to look for low cost trading platforms or brokerage accounts.
Finally, it's important to regularly review your portfolio and rebalance as needed. Over time, the mix of investments in your portfolio may shift due to market fluctuations, so it's important to periodically rebalance to maintain your desired level of diversification.
By focusing on diversification and lowering fees, you can build a more resilient portfolio that can weather market volatility and provide long term financial stability. So take the time to review your investments, consider diversifying across different asset classes, and look for ways to lower fees. Your future financial self will thank you.