Best Tools for Portfolio Diversification

Investing is an excellent way to grow your wealth and secure your financial future. However, it’s crucial to diversify your investment portfolio to minimize risks and maximize potential returns. Portfolio diversification is the practice of spreading your investments across various asset classes to reduce exposure to any single asset or risk.

There are numerous tools and platforms available today that can assist you in diversifying your portfolio. In this article, we will explore some of the best tools for portfolio diversification.

1. Personal Capital

Features and Benefits

Personal Capital is a wealth management platform that offers a variety of financial tools, including portfolio diversification. It provides a holistic view of your financial life, from budgeting to retirement planning.

One of the standout features of Personal Capital is its Investment Checkup tool. This tool analyzes your investment portfolio and gives you personalized recommendations to improve your diversification and overall investment strategy.

Why Choose Personal Capital

If you’re looking for a comprehensive financial platform that offers robust portfolio diversification tools, Personal Capital is a great choice. It’s easy to use, and the Investment Checkup tool can provide valuable insights into your investment strategy.

2. M1 Finance

Features and Benefits

M1 Finance is a free automated investment platform that makes portfolio diversification easy. You can create a custom “pie” of investments, which can include individual stocks, ETFs, and bonds.

M1 Finance also offers expert-built portfolios, which are pre-built investment pies designed to meet different financial goals and risk tolerances. These can be a great starting point if you’re new to investing or unsure how to diversify your portfolio.

Why Choose M1 Finance

M1 Finance is a great tool for both beginner and experienced investors. It’s user-friendly, and the ability to create custom investment pies gives you a lot of control over your portfolio diversification.

3. Betterment

Features and Benefits

Betterment is a robo-advisor that offers automated portfolio diversification. When you open an account with Betterment, you’ll be asked a series of questions about your financial goals and risk tolerance. Based on your answers, Betterment will create a diversified portfolio for you.

Betterment’s portfolios are built using ETFs, which are inherently diversified. They also offer a variety of portfolio strategies, including socially responsible investing and income-focused investing.

Why Choose Betterment

Betterment is a good choice if you want a hands-off approach to portfolio diversification. Their automated investment strategies can take the guesswork out of diversification, and their variety of portfolio strategies can cater to a wide range of investor types.

4. Morningstar

Features and Benefits

Morningstar is a well-known investment research platform that offers a variety of tools for portfolio diversification. Their Portfolio Manager tool allows you to track your investments and analyze your portfolio’s diversification.

Morningstar also offers a Portfolio X-Ray tool, which provides a detailed analysis of your portfolio’s asset allocation, sector weights, and exposure to different investment styles.

Why Choose Morningstar

If you’re a DIY investor who wants to take a hands-on approach to portfolio diversification, Morningstar’s tools can be very helpful. Their in-depth analysis can give you a clear picture of your portfolio’s diversification and highlight any areas where you may be overexposed.

Conclusion

Portfolio diversification is a key component of a successful investment strategy. Whether you’re a hands-on investor who wants to manage your own diversification or prefer a more automated approach, there are plenty of tools available to help you. Personal Capital, M1 Finance, Betterment, and Morningstar are all excellent options, each with their own unique features and benefits.