Diversify Your Investments For Your Welfare Now and In Retirement

It does not matter how much investment experience you have it is always a risky business. If this is your first turn around the dance floor you need to realize first and foremost that all investing is a risk of some sort. There is no such thing as risk free investing though certain types of investments certainly involve more risks than others. This is the main reason that it is so important to have a stock portfolio that is diversified enough to offer some insulation from devastation due to one stock, bond, or fund performing poorly while also making a noticeable difference when one performs extraordinarily well.

Investing should be treated like a business unless you have so much money and equities that it is more or less a hobby for you.  It may be just a way to ‘turn on’ or get you excited.  However, if you have a self directed IRA or a 401K which you are managing, you need to treat it like a business.  Chances are you are depending on this stash to live on following your days of actively working and when you are ready to retire.  Re – Tire comes from the French in 1533 and means to withdraw or to leave a place or to go to bed, etc.  The worst thing that can happen is to plan to retire and have all of your savings vanish because you invested in Blimps, or a cemetery, or on line businesses.  I speak from experience.

In other words, diversifying your portfolio tempers the risks you are taking by investing to some degree. I am sure you’ve heard the old saying “never put all your eggs in one basket” Diversifying your portfolio moves your eggs around so that your nest egg has more than one layer or protection from the evils of the world and the fickle minds of men and the World Stock Exchanges.  My advice to you would be to look closely at stocks which are called “index stocks.”  An ‘index’ stock is a fund which is made up of all of the stocks in a certain sector. 

You want to diversify your investment portfolio so that one sector or one stock does not have the power to sink your financial future in one fell swoop. You want to feel secure that your investments are secure to some degree despite the many risks you will face. In fact you need that sense of security in order to sleep and continue investing and building your financial future. 'You cannot sell out of an empty cart' and if you lose your money with “friends” you may not have enough remaining to continue to build your portfolio. You will find that it is nearly impossible to work on a financial future in which you do not believe.

If that isn’t enough however you want to diversify so that you have the opportunity to spread the wealth a bit too. You want to have a few opportunities to take the risks that make the real money in the stock market game. You cannot really do this if all your monies are tied up in ventures that are designed to play it safe and run the marathon. It’s nice, on occasion to feel the wind in your hair as you sprint towards your financial goals rather than going at the snails pace in exchange for security. In other words, diversity brings a sense of balance to your portfolio too.  It ceases to be fun when you are feeling the wind and you slam into a wall.  I ran into such a wall and fell back so hard I am still reeling.  I do sleep, but it is in a smaller house.  My dad always said, “don’t invest in the stock market unless you can afford to lose all of your investment.”  Well he never took any chances since he lived thru the “great depression” in the 30’s and we are living through the ‘great depression’ of the 2010’s.  Same thing, but different!

There are all kinds of investments. You will find many different companies, many different sectors, different types of stocks, bonds, funds, and all manner of investment opportunities that each bring to the table a different type of risk and a different type of security upon which you can feast while organizing your portfolio in a meal that should is meant to last a lifetime and keep your family fed, clothed, and happy for many years to come. In order to do all of these things your financial situation needs to be as well rounded as you are as a person and your stock portfolio needs that liberal arts education that includes a little bit of everything.

If you can accomplish this with your portfolio then your financial outlook should be much brighter and bolder than it would be if you left all your efforts in one basket and dined on one plate for the rest of your life. Sounds like prison to me.  I was born in the United States where people do take chances.  The eagle is our national symbol.  The eagle has to hunt and plan on where to get what they need to survive.  It is not so with the oyster which just lays in the water and waits for the current to bring in what food he gets.  My choice is to be an eagle, not an oyster waiting to be fed.  Make sure your portfolio has a good mix of conservative and high risk investments to ensure profits in the future.

Cause Joy!