Diversification is a key idea to consider when investing. Diversification is the process of spreading your investment such that your exposure to any asset is limited. It is often remarked that we should not put all of our eggs in one basket. It is one technique for an investor to balance the risks and rewards in his portfolio. Diversification is also important in mitigating market volatility. Diversification does not always guarantee profit or loss, but it reduces the amount and intensity of stomach-churning ups and downs.

Diversification lessons can be learned from one of the most famous cricketers of all time, Mahindra Singh Dhoni, the ex-captain of the Indian cricket team and also known as the captain cool. When it comes to business investing, Captain Cool has successfully used the lesson of diversification in his life.

Dhoni has invested in a number of businesses and continues to support them with his time and money. Here are a few of the businesses he has invested in and built over the years.

1 A sports franchise

MS Dhoni is a co-owner of Chennaiyin FC in the Indian Super League (ISL).

Dhoni was also a co-owner of the Ranchi Rays hockey team, which competed in the Hockey India League.

2 SEVEN

In 2016, MS Dhoni established his lifestyle brand SEVEN. SEVEN, named after his legendary jersey number, sells clothes and footwear.

3 Rhiti Sports

Rhiti Sports is a sports marketing and management organization that handles cricketers such as Bhuvneshwar Kumar, Faf du Plessis, and Mohit Sharma.

4 Sports Fit World Pvt Ltd

Sports Fit World Pvt Ltd is a private limited company based in India. MS Dhoni's SportsFit World Pvt Ltd begun looking into the commercial fitness arena.

5 Khatabook        

MS Dhoni recently invested in Bangalore-based startup Khatabook and became the app's brand ambassador.

6 Organic Farming

Apart from commercial ventures, MS Dhoni has personally invested time and money in the development of organic farming in Ranchi. Dhoni has been farming on approximately 10 acres of land in his 43-acre Ranchi farmhouse. Strawberries, peas, tomatoes, and cabbages are among the veggies apparently cultivated by Dhoni in his Ranchi farmhouse.

As seen above, MS Dhoni has invested in a variety of enterprises ranging from a clothing company to a management firm to farming, all of which are in diverse sectors and industries.

The same principle can be learned and implemented whether investing in different assets or establishing an equity portfolio.

Here are some of the pros and cons of diversification.

Pros

·         Reduces the possibility of loss

·         Controls market volatility.

·         Opportunities for long-term growth

·         It eliminates the normal economy's cyclical nature.

Cons

·         Over diversification poses a risk.

·         The cost of maintenance may be relatively higher.

·         It complicates the investment process.

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