Variety is often described as the "spice of life", as without it things just would not be the same, so how can we apply this particular proverb to property speculation?
As with any sort of investment, the phrase ''don't put all your eggs in one basket'' springs immediately to mind. In matters where money is concerned and during this period of economic recovery and instability in some parts of the world, it is important to diversify assets
to ensure that maximum returns can be made, while at the same time minimising risk.
With real estate in particular, it is advisable not to hedge all your bets on a specific location or property type, especially in markets where there are economic troubles or the potential for political instability to cause a sudden crash.
Writing for the Buy Association website, Camilla Dell, managing partner of UK-based Black Brick Property Solutions, pinpointed diversity as the key to property investment success.
Citing the recent debt crisis which took place across Europe, Ms Dell highlights the fact that many savvy investors have already begun to switch on to the advantages of having a diversified portfolio
, with many searching for safe havens to offer them long-term returns on investment which can offset any risks taken in less stable countries.
Buyers are advised to take advantage of stable markets, but to also look at putting their money into emerging destinations where the rewards can be greater.
"Diversity minimises the inherent risk factor by spreading the impact of any change in demand for a particular property type or location. It also reduces the effect of void periods on income as it is unlikely all an investor's properties will be empty at any one time," she explains.
Furthermore, the importance of spreading risk has been noted by property investment portal Reita, which claims that individuals should look to have diversity and balance over their portfolios. The real estate advice organisation highlighted the fact that market forces can affect each sector or country in a different manner.
Choosing a safe place to invest is all about looking at destinations where demand is high and stability is rife. There may not be the potential for huge short-term returns, but the risk of losses is greatly reduced. "This is what makes London a great place for investment as not only is there sustained demand from foreigners ... but there will always be demand from those from other UK locations," Ms Dell says.
- Friday 11 June 2010