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What does it take to be a smart investor? Let's test your investment ability first. As a sensible investor, to minimize investment risks, you need to diversify your investments and "don't put all your eggs in one basket".

A person can save part of his possessions and use some of them. Therefore, in a person's life, the amount of money we earn should be equal to the amount of money we have saved plus the amount of money we have spent.

There are two main reasons why people want to save money: one is to prevent old age, accidents, and unemployment; The second is to earn interest, so that the original money continues to increase, or at least to ensure that the money earned does not depreciate.

Due to factors such as inflation and rising incomes, the money that people earn, if you don't let it increase in value, will invisibly depreciate, so if we want to keep our money from depreciating, we have to invest. In fact, in real life, saving money to get interest and saving money to prevent old age and prevent risks are not contradictory, the most ideal state is that saving money can not only increase in value, but also prevent aging and prevent future risks.

As the saying goes, "High risk, high reward." "In real life, the most profitable and risky investment activities are financial investment activities. Due to the relatively high investment risk in the financial industry, many people will rely on saving money in banks and other financial institutions to prevent old age. There are also many investment activities in the financial industry, mainly including buying and selling gold, foreign exchange, stocks, and bonds, and the purpose of financial investors buying and selling financial instruments is to earn the difference between buying and selling. Financial investment requires superb skills, flexible information, correct and decisive judgment, it is not something that ordinary people can control, and professional financial knowledge is required to carry out financial investment activities.

So, how do you be a savvy investor as an individual? First of all, let's test our investment ability. If we want to invest in different securities (or bonds), then our purpose may be the following: 1. Increase the return on investment and sell each security when it is high; 2. "Outperform" the market; 3. Reduce the chance of investment losses; 4. Just purely follow the trend, and when I see others doing it, I learn to do it.

As a rational individual investor, we have to choose 3, that is, investment to reduce investment risk as much as possible, and this requires diversification, "don't put all your eggs in the same basket" is the wisdom of personal investment, this modern investment portfolio theory was born in 1957, it requires investors to step by step, systematically design the portfolio of investment, minimize the risk, it also requires us to master the secret of diversification.

If we use 1 million yuan to invest, assuming that investors only have two products A and B to choose from, then how to allocate funds to minimize the risk? Different people may choose the following fund allocation schemes: 1. Invest all the funds in product A; 2. Invest all the funds in product B; 3. Invest most of the funds in product A, and invest a small part in product B; D. Invest a small part of the funds in product A, and most of the funds in product B.

For risk-taking, aggressive investors, choose 1 or 2 and gamble, although the volatility is relatively large, but its return is also large. As a relatively stable investor, how should you allocate your funds? If product A and product B are different investment products, the price fluctuations are not synchronized, when A rises, B does not necessarily rise, and when A falls, B may rise. If the price direction of the two products is opposite, then the portfolio of the two products needs to be matched. It can be seen from here that in order to effectively diversify investments and reduce investment risks, it is best to choose products with completely opposite price fluctuations when choosing investment products. In this way, losses in one investment product can be compensated by profits in another investment product.

If we have multiple technology funds to choose from at the same time, can we choose different technology funds to diversify investment risks? In fact, this is not the case. In fact, each science and technology fund has diversified enough risks, but the risk of the technology industry itself is the risk that must be borne by investing in science and technology funds, and this industry risk will not be reduced by buying a few more science and technology funds, that is to say, the risk of buying a science and technology fund is the same as buying multiple science and technology funds. Therefore, in order to diversify investment risks, it is necessary to make the products invested as unrelated as possible.

Some people may think that investing in a low-risk product and then investing in a high-risk product can achieve medium risk by offsetting each other. This is also a low-risk product, because the presence of one high-risk product does not reduce the other. But on the other hand, if a more conservative investor buys a lot of low-risk ** bonds (treasury bonds), then, he adds some high-risk investment, not only will not increase the overall investment risk, but can moderately reduce the investment risk and increase the overall investment return, because a small amount of high-risk investment also means its potential high returns, if the investment has high returns, you can quickly withdraw some funds to obtain higher returns, and if its income is lost, you can quickly shoot and will not be "trapped".

In short, the purpose of diversification is to reduce risk through diversification without affecting the expected return of investment, and the secret is that the investment products selected must be products that have little relationship with each other and do not affect each other. But it's not like buying only high-performing stocks and not junk stocks. The first step in diversification is to determine the weighting of stocks/bonds (Treasuries), which perform differently at critical times.

For example, when the central bank is expected to raise interest rates, the stock market will fall and money will be transferred to the bond market. During a period of economic recovery, both stocks and bonds rise, and both fall when the economy falls back from its peak. The second step of diversification is to disperse funds in different markets and regions, such as **, Shenzhen, Shanghai and other three different places, the rise and fall of stock prices are not synchronized, diversification can effectively reduce risks.

Another way to diversify your investment is to spread your funds across different industries, such as industry, transportation, utilities, finance, etc., where stock prices rise and fall out of sync, and diversification is also conducive to reducing risk. In investment, it is especially important to diversify the company's risk, for example, we know that some high-tech industries, the prospects are very good, but the elimination rate is also very high, if we spread our funds in more than 10 promising companies, even if only a few companies are successful, then the profits brought by these companies are enough to compensate for the failure of the investment.

Another way to reduce investment risk is to diversify your asset investment, which can include treasury bonds, art, collectibles, precious metals, real estate, etc., in addition to stocks. However, there is also a disadvantage of these asset investments that they cannot be "cashed out", and their liquidity is relatively poor. In addition, we can also regulate investment risk by cultivating cash, i.e., investing a lot of cash when the stock or bond market is rising, and increasing cash holdings when the market reverses. When losses come, you can also use financial derivatives such as stock futures or stock options to "lock" in part or all of your portfolio, which is conducive to minimizing risks.