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Diversify to spread the risk. #finance

I’m not wealthy, in fact, my income is low. So my discretionary income, that money that I have leftover when I’ve paid for all the essentials, is low too. So, I try to boost my discretionary income with money from investments. I also try to diversify to spread the risk.

Diversify to spread the risk

I diversify to spread the risk by buying stock in different companies but also different sectors. Today, the banks are down but that has been offset by an announcement by Verona Pharma that sent its share price soaring upwards by 40%. Other pharmaceuticals are improving too. I closely monitor the finance sector and the pharmaceutical sector. The former is down and the latter is up.

Premier Foods

Premier foods have continued to improve this week reaching a new high of 91.5. A multi-bagger is when a share price increases by multiples of the price that we bought at. Premier Foods cost me  46.154 a share. The original price was just 4p a share but a lot has happened since then including consolidation and a rights issue. I’m not quite in the multi-bagger territory, perhaps next week!

Pandemic opportunities

Some share prices are still very low and so there are opportunities to buy into the economic recovery. The market makers have increased the spreads to get a higher return on their holdings which in turn does dampen trade in some AIM companies. Those companies will struggle to survive but many are raising finance and there are opportunities. Even some bigger companies have done fund-raising via Primary Bid which gives private investors an opportunity to invest in new discounted issues.

Research

It is important to do research and know something about the companies you are investing in then diversify to spread the risk. There is lots of information on the internet about the companies and you can also check the recommendations of leading brokers.

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