When it comes to investing in ASX shares, it is arguably a better idea to get your tips and tricks from investors with wealth behind them. After all, if you're good at investing, it won't be too long before you have some wealth to play with.
That's why Warren Buffett's annual letter to the shareholders of Berkshire Hathaway is always raked over with a fine-toothed comb worldwide when it is released every year.
However, it's hard to round up the ASX's wealthiest investors in one room to pick their collective brains about how to build a portfolio of ASX shares.
Luckily for us, we can get the next best thing. The ASX itself has just released its 2023 Australian Investor Study report. And it contains some interesting insights into how high-value investors (read wealthy) deploy their capital into their ASX shares.
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Diversification in ASX shares separates the HVIs from the non-HVIs
One of the report's key findings between high-value investors (HVIs) and 'non-HVIs' was that HVIs are "far more likely to have diversified investment portfolios" than non-HVIs.
The report found that 85% of HVIs surveyed for the report claimed to have a diversified portfolio of ASX shares and other assets. That's compared to 43% of non-HVIs. 12% of HVIs didn't claim to have a diversified portfolio, while 3% were unsure. That compares to 39% and 18% respectively for non-HVIs.
Here's some of what the report said:
Given their high volumes of holdings across a wide range of investment products, this cohort [HVIs] is the best diversified of all investor segments, with 85% of HVIs claiming to have diversified portfolios. The average number of products held is 6.4, compared with 2.3 for non-HVIs.
The report also found that 'need for portfolio diversification' was a top three consideration for 25% of surveyed HVI investors when making ASX share investment decisions. That's compared to 17% for non-HVIs.
In contrast, 42% of non-HVI investors identified 'potential return of investment' as a top priority. 40% of HVIs said the same.
As such, we can conclude that diversification is clearly a far more important priority for high-value investors than non-high-value investors.
This is understandable to a degree. If you're just starting out with investing, chances are your priority is building wealth, not diversifying it. It takes a lot of cash to be able to have your capital spread out between 10-20 different shares in the proportions you might like, for instance.
But this report just goes to show how important successful investors regard diversifying one's assets. That's an important lesson for all investors today.
