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Diversify, Diversify, Diversify?

"Divide your portion to seven, or even eight, for you do not know what misfortune may occur on the earth."

Eccl 11:2

Have you heard of stories about people earning millions and you thought they had it all made, when suddenly they are declared bankrupt? And you wonder to yourself "what happen?". A typical mistake is to dump all your money into an investment and then when it sours up, you lose everything. Failure to diversify.

There are those who mock diversification and almost treating this concept with contempt. But what does the Bible say? Ecclesiates 11:2. Diversify.

Diversification is spreading your money among many difference types of investment. When you do this, you lower your overall risk. There are many ways to diversify. You can diversify by spreading your assets, diversify with different investment styles, diversify by geography, and so on and so forth. I will go into some details.

Diversification by assets can be in the form of stocks, real estate, bonds, cash, and even precious metal like gold and silver. However, diversification does not mean you jump into it blindly. Do your research first.

Diversifiation by investment styles can be in the form of value-driven investment, market orientated investment, and small capitalization investment.

Real estate represents an investment that can benefit from geographical diversification. International investments comprise another asset class that could and should be invested geographically. Emerging markets may offer excellent growth potential.


Today's Bottom Line

Whatever your investment, remember to diversify. That because calamities and misfortunes can occur on the earth anytime.


This article is from financial articles




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