5 ways to spread your risk

You have placed your first investment orders. As a next step, it is a good idea also to develop your own investment strategy. An important part of this is spreading the risk.

 

Why spread risk?

Spreading ensures fewer peaks and troughs in the total value development of your investments. And the outliers will be less severe, both up and down. Here we show you how to spread your investments. 

1. Spreading in investment categories

You can spread the risk in your investment portfolio by including investment categories that respond in a contrary or less severe way to a particular event. To this end, you can make use of our entire range: shares, ETFs, equity funds, bond funds or mixed funds. In this way, you are less vulnerable to, for example, a sharp fall in share prices or interest rate changes in bonds.

To be able to properly spread with Self Directed Investing Basic, investment funds and/or ETFs are necessary. Only with these can you invest in bonds and regions worldwide. For example, investment funds and ETFs always invest in multiple shares or bonds, so you also ensure more spread. 

Here we give an example of three investment portfolios and their spread. These are strategic distributions that our experts use themselves.

 
Defensive investing

Defensive investing

Moderately offensive investing

Moderately offensive investing

Very offensive investing

Very offensive investing

Defensive investing

Defensive investing

Moderately offensive investing

Moderately offensive investing

Very offensive investing

Very offensive investing
 

2. Spreading in regions

Buy investments from different countries and continents. This keeps risks down if things don’t go very well in one country or on one continent. For example, if you only buy AEX shares, your investments are vulnerable to a weaker period of the AEX. Here we show you what distribution the experts at ABN AMRO recommend themselves. 

ABN AMRO’s strategic distribution:

Spreading in regions

3. Spreading among business sectors

Buy investments from different business sectors. Because if you only invest in oil-related companies, for example, you are vulnerable to losses when the oil industry experiences bad times. There are Funds and ETFs that invest in a particular sector. You can find and compare funds and ETFs with the fund seeker.

4. Spreading when you buy

Buy investments at different times over one or several years. This way you will have multiple purchase prices, leading to an average purchase price. You can do this with Periodic Investing, for example.

5. Spreading over time

Be patient when investing and invest your money over a longer period of time. Measured over a longer period, peaks and troughs of the stock market will level off and only the general movement (trend) is important for the end result. Investing for a longer period of time gives you a greater chance of the expected return.