Financial Calculators

Diversification Calculator

Adjust the sliders to simulate your potential portfolio performance

Your Investment Amount (SGD)


No. of SMEs you'd invest in


Assuming the average interest rate per annum(%) is:


Assuming the average default rate across your portfolio is:


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Table of contents

How does the Investment Diversification Calculator work?
The Why and How of Portfolio Diversification
Where did portfolio diversification originate?
The Benefits of Using the Investment Diversification Calculator
Determine your risk allocation with this investment calculator
Diversification has been a long-standing strategy used by investors to mitigate risk and maximize returns. The principle behind it is simple: by spreading investments across a variety of assets, an investor can reduce their exposure to any one particular asset or market. Portfolio diversification is essential for both novice and seasoned investors, and the good news is that the investment diversification calculator can make the process much easier.

How does the Investment Diversification Calculator work?

The Investment Diversification Calculator is a powerful tool that can help investors determine the best mix of investments for their portfolio. The calculator takes into account the investor's investment amount, the number of small and medium enterprises invested in, fund allocation, average interest rate, and average portfolio default rate. Based on these inputs, the calculator will provide a recommendation for the optimal diversification strategy.
The calculator uses a complex algorithm to determine the best mix of assets based on historical data, market trends, and risk analysis. It will provide investors with a breakdown of the recommended portfolio allocation, including the percentage of assets allocated to each type of investment. This information can help investors make informed decisions about how to allocate their capital to minimize risk and optimize returns.

The Why and How of Portfolio Diversification

Portfolio diversification has been around for centuries, and it has proven to be a successful strategy in reducing risk and increasing returns. The principle of diversification is based on the idea that it is better to spread investments across different types of assets, such as stocks, bonds, real estate, and commodities. By diversifying, investors can reduce their exposure to any one particular asset or market.
The strategy of portfolio diversification has gained more popularity over time, as financial markets have become more complex and volatile. By investing in a mix of assets, investors can spread their risk and reduce the impact of any one asset's poor performance.

Where did portfolio diversification originate?

The concept of portfolio diversification was first introduced by Harry Markowitz, an economist and Nobel Laureate. In 1952, Markowitz published a paper titled "Portfolio Selection," which laid the foundation for modern portfolio theory. He argued that the key to achieving optimal returns was not to focus on individual assets but to build a diversified portfolio that could provide consistent returns over time.
Markowitz's work was later expanded upon by William Sharpe, who developed the Capital Asset Pricing Model (CAPM) in 1964. The CAPM is a model used to determine the expected return on an asset based on its risk relative to the overall market.
Since then, numerous studies have shown that diversification is a sound investment strategy. By spreading investments across multiple assets, investors can reduce their risk and increase their chances of achieving consistent returns over time.

The Benefits of Using the Investment Diversification Calculator

The Investment Diversification Calculator offers several benefits to investors, including:
  • Objective Analysis: The calculator provides investors with an objective analysis of their portfolio, based on historical data, market trends, and risk analysis.
  • Customized Recommendations: The calculator provides customized recommendations based on an investor's unique financial situation, investment goals, and risk tolerance.
  • Easy to Use: The calculator is user-friendly and easy to navigate, even for novice investors.
  • Time-Saving: The calculator saves investors time by providing quick and accurate recommendations for portfolio diversification.
  • Improved Returns: By following the recommended portfolio allocation, investors can optimize their returns while minimizing their risk exposure.
  • Determine your risk allocation with this investment calculator

    Portfolio diversification is a proven investment strategy that can help investors mitigate risk and optimize returns. The Investment Diversification Calculator offers investors a powerful tool to analyze their portfolio and determine the best mix of assets for their investment goals and risk tolerance. By using the calculator, investors can make informed decisions about how to allocate their capital, improve their returns, and achieve their financial goals. However, it is important to remember that diversification does not eliminate risk entirely, and no investment strategy is foolproof.
    Investors should also keep in mind that historical data and market trends are not guarantees of future performance. While the Investment Diversification Calculator can provide valuable insights, it is important to conduct further research and consult with a financial advisor before making any investment decisions.
    In summary, the Investment Diversification Calculator is an excellent tool for investors who want to build a diversified portfolio that can optimize returns while minimizing risk exposure. By inputting their investment amount, fund allocation, and other variables, investors can receive customized recommendations that are based on objective analysis and historical data. Ultimately, diversification is an essential strategy for any investor who wants to achieve their financial goals while minimizing risk exposure.
    John Cruz
    Article author
    John Cruz
    John is a PhD student with a passion to mathematics and education. In his freetime John likes to go hiking and bicycling.
    Diversification Calculator English
    Published: Fri Mar 03 2023
    In category Financial calculators
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