Often, investors get so caught up with how much money they expect to make in their portfolio that they forget about protecting what they already have. As an investor, your first priority should be to protect your capital, once that’s sorted out you can focus on putting your money to work for you.

Protecting your property or privacy is a natural instinct. There are many things we do as individuals to protect our property, but one thing very few people do is protect the value of their portfolio. We put our money in the bank or in a safe deposit box, without a second thought to how inflation and market risks will affect its value.

Market risk is a risk you take when you invest in the market. If the particular market you have invested in (stocks, real estate, bonds etc.) crashes, the value of your investment will drop. This risk can be reduced by spreading your money around in different markets, this way you reduce the exposure of your portfolio to any one market. If one or two markets experience a crash, the value of your portfolio will suffer less.
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