The reason for Diversification. I know many of you may be saying, ‘What is that and I’m already struggling with budgeting, I don’t need to learn too much at once, its overwhelming?’ Well if you are a client of mine, I always stress saving, paying off debt and grasping budgeting all at once. It is doable. Today I want to talk about saving and how wise it is to diversify your money. You don’t have to have loads of money to start doing this.
What is diversification?
Is the strategy of investing in a variety of securities in order to lower the risk involved with putting money into few investments. (Investopedia.com)
Here are a few options: In your retirement savings spread your funds in cash/bonds, high risk stocks, medium risk stocks. If possible, purchase properties and land. Research options out of state. A true investment is one that is making you money, so living in a home you bought is not a true investment. Also investments in other businesses count. Have stocks and bonds outside of retirement funds. Save cash, money market and CDs in multiple accounts. You can get an advisor to help you figure out where to allocate your money. However be mindful, any investor telling you in put all your cash in any one place should not be trusted.
Imagine all your money placed in high risk stocks which you planned to use next month for retirement or school payments was cut in half following the most recent drop in stocks, you would be pissed to say the least. Having your hard earned money spread out helps you to stay afloat in crisis. All money should never be in stock, Why? it’s not dependable. All our life savings should never be in your properties because a return profit is unpredictable. Do you research, I only named a few things but there are numerous options. Start a few today.
Investing is personal. Not sure about where to put money, do your research. Start reading financial articles, subscribe to financial blogs and read books. Tools I used to determine where to put my money, stemmed from the leading in my prayer time and organizations/industries that I had a special affinity for. However, on top of that I researched the industry, read articles, books, joined groups that would give me further direction. All my choices were not successful but it was necessary for the journey.
