Diversification is the
key to successful investing. All successful investors build portfolios that are
widely diversified
“Don’t put all of your eggs in one basket!” You’ve probably
heard that over and over again throughout your life…and when it comes to
investing, it is very true. Diversification is the key to successful investing.
All successful investors build portfolios that are widely diversified, and you
should too!
Diversifying your investments might include purchasing
various stocks in many different industries. It may include purchasing bonds,
investing in money market accounts, or even in some real property. The key is
to invest in several different areas – not just one.
Over time, research has shown that investors who have
diversified portfolios usually see more consistent and stable returns on their
investments than those who just invest in one thing. By investing in several
different markets, you will actually be at less risk also.
For instance, if you have invested all of your money in one
stock, and that stock takes a significant plunge, you will most likely find
that you have lost all of your money. On the other hand, if you have invested
in ten different stocks, and nine are doing well while one plunges, you are
still in reasonably good shape.
A good diversification will usually include stocks, bonds,
real property, and cash. It may take time to diversify your portfolio.
Depending on how much you have to initially invest, you may have to start with
one type of investment, and invest in other areas as time goes by.
This is okay, but if you can divide your initial investment
funds among various types of investments, you will find that you have a lower
risk of losing your money, and over time, you will see better returns.
Experts also suggest that you spread your investment money
evenly among your investments. In other words, if you start with $100,000 to
invest, invest $25,000 in stocks, $25,000 in real property, $25,000 in bonds,
and put $25,000 in an interest bearing savings account.
Contact:
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