What are the different form of diversifications which should be included in an investment portfolio

Indian stock market has proven itself a suitable medium for investment from its past performance and because of its capability to offer good returns on investment large number of investors prefer to invest here. However market's highly volatile nature makes it quite difficult to earn desired returns. To sustain market's volatility and earn good returns investors needs to maintain a well diversified portfolio. They can refer financial advisory services providers as well to get useful recommendations from trading point of view and earn well.

Following are some important form of diversification which investors can include in their investment portfolio

1. Industry based diversification

Having a good balance of multiple industries in portfolio is very important. And for this it is not required that you should prefer to choose industries with which you have good familiarity. If a industry fails to perform well then in such cases having good balance of different industries will save you from risk of losing your capital. As different industries react differently to the same event, good diversification helps you to be on the safer side.

2. Geography based diversification

You can choose stocks of companies present in different countries or cities. Also you can invest in real estate in India along with other countries. The main reason for doing so is to gain benefit from fluctuations in currencies.

3. Asset class based diversification

Investors can buy across different class of assets like equity, commodity, debt and more. Also investors can include options and derivatives in their portfolio. Having a balanced combination of variety of assets is helpful in reducing overall risk of investment portfolio.

4. Individual company based diversification

To market movements different companies reacts in a different manner. Investors should buy a mix of individual company's assets to invest wisely. If a company fails or its stocks price falls then other companies which are part of your portfolio will help to compensate loss caused by it.

5. Style based diversification

Investors can choose across different styles like stocks giving you fixed income, good growth, yearly dividend and more. This style based diversification will ensure your portfolio will earn good returns at different point of time.

Above mentioned are some important forms of diversification, but it is not required that you should diversify in all ways. Depending on goals which you want to accomplish you can identify which are best forms of diversification which you can use. To improve trade results you can refer trading tips, mcx tips and more as recommended by proficient experts of market. Financial advisors have very good knowledge about market and they give these suggestions after carefully understanding market behavior. Over diversification is not helpful, learn your goals and accordingly diversify your portfolio.