Asset Diversification

Diversifying your assets can save your retirement.

If you know anything about the stock market, you know that the experts say that you need to diversify your stock portfolio.  You have a better chance of making money if you have it spread out over multiple companies in multiple sectors.  That way you are insulated from the risk of something happening to one company or even a whole sector.  If you remember the Enron scandal then you probably remember hearing stories of people losing their entire retirement savings because it was all invested in that one company.  You may also remember the “Dot Com” bust when that entire sector took a huge dive.  Mutual funds are a great way for ordinary people to diversify their stock holdings because they provide a single place to invest money that then gets invested in a broad sampling of companies that have been selected by an expert.

The current economy has shown that it is really necessary to diversify at a higher level.  I don’t know about you, but my 401k is only a fraction of what it used to be.  Fortunately I’m still fairly young and have time to recover.  But what about all of the people who have retired or are about to retire?  They have seen their retirement money cut in half, or even to a third of what it was a year ago.

I suggest that people look into asset diversification.  What are other things that you could invest your money in that may insulate you during a poor economy?  There are many things.  A lot of people like real estate.  When times are good and prices are up, you can sell houses for a profit.  When the economy is bad, you can hold onto them and rent them for an income stream.  That makes a lot of sense if that is something you are interested in.

An investment avenue that I like is precious metals like gold and silver.  When the economy is down, like it is now, the values of metals go up.   I also heard today that people like Warren Buffet are recommending that people buy gold because they expect the price to keep going up.

I found a program where you can invest a fixed amount of money every month in gold and/or silver on a savings plan.  You aren’t just investing in something that you never see, like with stocks.  You receive the gold and silver as it is paid for.  You will probably save more money stuffing your mattress with gold and silver than you will stuffing it with dollars.

Wayne Woodworth
I invest in my 401k and in gold. I don’t hide it in my mattress though. It’s too hard to sleep on.

DISCLAIMER: I am not a financial adviser. This is just my opinion and what I have chosen to do with my savings. Please consult a real financial adviser to see what is right for you.

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