A diversifying a stock portfolio is a point important to reduce the risk of it. At the beginning, when the portfolio is formed and if there is no high capital available, it can be difficult to make an adequate diversification. However, as the portfolio grows, it is better to diversify. Diversification in a portfolio can be temporary, sectorial and geographic.
Markets available at Degiro to operate
The temporal diversification is to conduct buy new over time. For example, if we want to invest 10,000 euros in the ABC company, we can invest 5,000 euros today and 5,000 euros later. In any case, it would be very risky to invest all capital in the same company, even in the same sector. The diversification of the sector means investing in companies from different sectors so that one sector does not weigh more than a certain percentage of the portfolio.
Generally, geographic diversification takes longer to complete. When an investor forms a portfolio, he usually does so by investing in assets in the domestic market, in this case the continuous market. This is usually done due to the proximity of the companies, the knowledge of their brands, products etc.
However, geographical diversification has several advantages . First, we managed to reduce the country’s risk , understanding political and economic stability. In addition, we can position ourselves in sectors that are underrepresented in the national market, such as the technology sector.
If we wanted to position ourselves in foreign technology companies, we could do so by buying US shares (for example, Alphabet, Facebook, Amazon, Netflix etc.) or by investing in ETFs referenced to Nasdaq.
To trade in foreign markets , whether stocks or ETFs, we must do so through a broker and the less commissions we pay the better . For example, Degiro charges a fee for operating Portuguese shares of € 0.5 + 0.05% with a maximum of € 10, for European shares the fee is € 4 + 0.05% with a maximum of € 60 and ETF the commission is only 2 € + 0.03% and besides, some are free ( check the conditions listed ETFs without commission will ). Degiro does not charge maintenance or custody fees.
Markets available at Degiro
With Degiro , we can operate in the markets of Europe, America and Asia:
- Europe: Holland, Belgium, France, Germany, England, Austria, Switzerland, Denmark, Spain, Finland, Greece, Hungary, Ireland, Italy, Norway, Portugal, Poland, Sweden, Czech Republic and Turkey.
- America: United States (NYSE, Nasdaq, AMEX, Currenex) and Canada.
- Oceania: Australia.
Operating in different markets is an added value to be able to perform a wide geographical diversification, through shares or ETFs. A portfolio with exposure to different countries generally presents less risk . In situations where a geographical area presents economic problems and our exposure to that area causes losses, assets referenced to other countries will compensate for them.