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A diverse approach to finance #finance

Just the way we think about finance can help us save money and make money. Finance can be about risk and a diverse approach to finance can limit that risk. Using a diverse approach when we are investing is fairly common but we can also use a diverse approach when we are buying too.

A  diverse approach

Discretionary income

Our discretionary income is the money left over when we have paid for all the essentials like housing, food, energy, water and taxes. If we shop around to save money we can make our discretionary income go a lot farther and if we invest in a diverse way we can add to our discretionary income and effectively double the number of luxury goods and services that we are then able to afford.

Diverse buying

I buy a lot of tech equipment like lenses for my camera and although I buy famous brands, the online retailers aren’t so reliable. The retailer I bought the lenses from was based in Hong Kong and has simply disappeared. I assume they went out of business. All the lenses are out of warranty so it doesn’t make much difference. I’ve saved around £1,000 by shopping around and taking more risks but because I’ve used a diverse range of suppliers I have limited my risk. What if one of my tech purchases now goes wrong? The most expensive was £400 and I have saved £1,000 so even if I threw my smart TV away because it stopped working, I would still be £600 up.

Diverse investing

I also take a diverse approach to investing. I have shares in companies listed in the FTSE 100 index and the FTSE 250, together with the riskier ones in the AIM market. Recently it has been the more popular shares that have been slow to gain and I have been making gains on the AIM shares. It is often the other way around. This morning the market is down but I have one AIM share that is over 6% up so over the whole portfolio I am seeing some growth. Today’s riser is Immupharma which is a company developing a new drug for lupus. Over the past week, I have seen gains on the price of Solo Oil shares. On Wednesday they were 20% up on last week but dropped back as a result of a placing. I’m still over 70% up on Solo Oil and expecting it to soar even higher in the coming weeks. The effect of the Brexit vote and the falling pound still weighs on the likes of Debenhams but the weak pound helps GSK.

A diverse approach

A diverse approach to risk in many areas of life can limit risk. Even eating a varied diet can reduce the risk of certain diseases.

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