Having a balanced portfolio is the best way to fast track and ensure financial success and not a financial disaster. Trust me I have learnt the hard way! A couple of years back the only investments I had was in Steem, and that was locked up (powered up!). This was silly as if it collapses majorly then my whole portfolio is doomed. When Steem forked to Hive I decided to power down all my Steem and trade it for Bitcoin and altcoins (which are now worth around $5k).
True diversification
To be truly diversified means spreading your risk across different sectors (health, insurance, technology etc) as all sectors react differently to world events. This has been very clear during the Covid pandemic - some sectors such as health have done well, while others havent done great. The stock market generally does well over the long term, but having this diversification means greater stability over time.
Additionally if you have all your money in crypto and the market falls then your whole porftolio will take a hit (yes the markets generally move together!). This can be mitigated a bit in crypto by having a diverse range of projects in your portfolio, such as privacy coins, DEFI, NFT etc, as they will all react slightly different if the market does tank.
A diverse portfolio will also include assets across different countries, as again each country will react different to world events and also it gives your portfolio a chance to gain (or lose!) from fluctuations in the currency market. For example I have started exploring the American stock market (as it is the largest), but I am from New Zealand and will also be learning and investing in the New Zealand stock market in the future.
Varying degrees of risk
Obviously with investing it makes sense to spread your investments across varying risk profiles. Crypto is known to have massive swings in short periods of time and thus more high risk. Although many of us are used to this it still makes sense to have investments in other areas with alot less potential rewards, but also alot less potential for massive losses (and panic selling!).
Obviously money in the bank (or even cash) is the most safe form of investment, but also gives the lowest returns. Some term deposits can offer higher returns but are still very safe options, along with corporate and government bonds. Although there is more risk in the stock market, it does depend on your risk profile - ETFs are a safer bet than taking a punt on a random company without doing your research!
Nothing wrong with a gamble every now and again
Diversifying your portfolio makes alot of sense and is a way to give a buffer if one industry/market goes down alot. However I think that taking some gambles along the way is a good idea. I generally make sure my gambles are small (money I can afford to lose!) and I do my research first. Sometimes these go really well but sometimes they go belly up.
Always do your research
As with anything investing it does pay to do your own research when investing money into anything new. Investing is complicated and can make alot of money with the right approach, but also can lead to tears if you dont have a solid plan.
Remember I am not a financial advisor this is just some thoughts on how I am starting to approach investing and some mistakes I have made along the way.
How do you all approach investing??