Page 21 - A Canuck's Guide to Financial Literacy 2020

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• Industry - adding companies in various industry will allow your portfolio to withstand
business cycles
• Geographic - investing in different countries can reduce the risk of your portfolio
• Management Style - depending on the portfolio manager's mandate, diversification
can be achieved. (Value vs. Growth)
• Maturity - Bond laddering or GIC ladder can add diversification to a portfolio. Buying
fixed income instruments at different intervals
• Credit - Including companies with strong credit rating and low credit rating such as
high yield bond.

Example of a Diversified Portfolio:

It’s important to find your comfort level with risk and develop an investment strategy around
that level. A portfolio that carries a lot of risk may have the ability to generate higher returns
but it may also cause you to lose your investments. There is no right or wrong amount of
risk as it’s a very personal decision. Only take as much risk a you’re comfortable with and
always remember that risk is a natural part of investing. As well, keep in mind other types of
risks discussed when you’re choosing what to invest in.