From the last Post:https://planurmoney.wordpress.com/2015/09/08/personal-finance-simplified-in-terms-of-journey-2/
we would have been by now, well equipped with the means, for reaching our targeted Goals in Future.
Summary of Last Post is: Map your means (Asset Class & Allocations) efficiently with the Goal Based Approach Investment Strategy for Long Term Wealth Creation.
Let’s today talk about a very subjective & debatable topic, which will land us, at such a wonderful experience, of being Financially Independent down the line, provided choices made were right & holding period is sufficient enough.
Plain Dictionary meaning of Concentrated is Focused & Diversified is spread out.
Coming to Portfolio Creation:
Concentrated Portfolio, signifies,where we are focused, only to Limited Asset within an Asset Class or Asst Class & keep on increasing our allocations, in those limited scope of Investment Avenues.
Hence it too can be concluded that we are putting all the eggs in the same basket & if something goes wrong we are written off, but it can create wonders too & that too beyond imagination, in LT wealth creation, if our initial choice to pick the means, to reach our destination is right & our strategy is buy right & sit tight.
Alternative to the above methodology of Portfolio Creation is:
Diversified Portfolio: It, in turn demonstrates, that more we spread out, in our Investment Strategy, better are the chances to mitigate the risk from losers in our PF, with those out-performers in the PF. Here, we are saying that, keeping 10 eggs in 4-5 baskets…If 1-2 baskets are gone, at least 3 still are there, to safeguard our vested interests, in our money making Journey.
Both the Approaches have their own Repercussions & as I have always insisted, that it is Personal Finance, final call lies with the Individual in discussion, based on various other allied parameters such as Risk Appetite, Capital Allocation, Age,Investment Horizon, to name a few.
Hope this helps…
Bharat Sahni
PlanUrMoney 