What is risk diversification or how to protect your money from scams

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Risk diversification

Investing almost always carries certain risks for your funds. If the investment is made in HYIPs, then the risks can be huge at all, since the HYIP industry itself is extremely unstable and unpredictable. But even in such an inadequate environment, risks can be significantly reduced through diversification of funds.

The English proverb says: “Do not put all your eggs in one basket,” and the British, as people who are successful in financial affairs, are completely right. This phrase fully reflects one of the main principles of investing in HYIPs, called diversification. Under the abstruse word, which not everyone has heard, lies a very simple meaning.

Diversification – reduction of financial risks due to the distribution of capital for several investment projects. The essence of this term can be explained by a simple example, which is quite common in a hype environment. If an investor owns $ 1000 and invests them in a project he likes, then in case of scam he will be left with an empty pocket and an annoying insult in his soul. If the investor is able to think more globally, then he will invest in equal shares in ten projects and, in the case of scam of any hype from his portfolio, losses will be covered by income from others.

As you can see, there is nothing complicated in diversifying funds and, if you think logically, this method really reduces the possible risks to a minimum. But, again, to minimize risks through the allocation of funds is possible only if you select really high-quality projects that have a chance of a good job – if you get a full portfolio of slag, then I’m sorry, but diversification will not work. +

It is also important to be able to distribute shares in your portfolio among low-risk and high-risk projects. It is well known that fasts carry a greater risk, while low-profit projects are the safest. This fact should be used in the selection of projects for diversification. At the same time, most of the capital in the amount of 70-75% should be invested in more reliable instruments, for example, low-income and medium-income projects, while for the “fast’ reserve the remaining amount of 25-30% of the bank.

Guided by the principle of diversification, do not forget about other important investment rules, which together will significantly increase the chance of success:

  • Carefully analyze the projects that you select for diversification. Pay attention to the technical side of the project, its marketing, evaluate the promotion, the opinion of other investors.
  • Be sure to go to the project through a referral link, because if you get a refback, you will go to breakeven much faster, which means you reduce the risk of losing funds.
  • Do not try to pick up as many projects as possible in your portfolio – let there be several, but you will be as confident as possible in their work capacity.
  • Choose those projects that started recently. At the same time, you should not fly into the project without figuring out what it is.
  • Use tactics of chitran in projects that pose the greatest risks (high interest) and tactics of reinvesting interest in HYIPs that inspire confidence.
  • Try to choose projects with the shortest possible investment periods, as well as those that return the deposit in payments, and not at the end of the term.

Be sure to keep a record of your investments and analyze the results for a certain period (week, month). Draw conclusions from the data obtained, determine the category of projects that bring the maximum portion of income – for such sites, the percentage of the bank’s amount can be increased. For example, if medium-income projects showed better performance, and fasts incur only losses, then the number of profitable projects can be increased at the expense of funds withdrawn from the unprofitable cell of the portfolio. At the same time, it is important to take into account that in mind you have a really high-quality medium-interest hype, which should be included in the list.
Diversification of funds is a fundamental method that has been tested by many investors operating not only in hype space. Be sure to resort to it in order for your investment to generate income, not loss.

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