ScaredyCatGuide Random Financial Tip - The New Age of Diversification
Even the most non-investment minded person has heard the phrase "diversify." Usually it is referred to within the equity and credit markets - meaning, put your money in a combination of different stocks, bonds and the like.
However, we are in a new world of easily accessible information and investment opportunity.
Diversification is and should be much more....
Since most have a basic understanding of stocks and diversifying between growth stocks and safe stocks (consumer staples, utilities, etc.) we are going to focus on other assets you can diversify into along with holding stocks and bonds.
Real Estate
Did you know that if you have a self-directed IRA you can use that money to invest in real estate?
That is correct, you are not stuck with only stocks and bonds. That money can be used to buy real estate or even as a down payment on a property.
You can also look into investing in to real estate syndicates that pool money to fund real estate projects and properties. Realty Shares is one place you can do so. Here is one a blog post from their site discussing it: IRA Investing.(I have no affiliation)
Furthermore, if you invest in real estate, whether using your IRA or not, this is an asset class that puts some of your money completely outside of the stock market. If invested well, real estate provides great long-term returns, especially if you hold them as rentals and "buy right." I explain how to do this in detail on the scaredcatguide.com website and in the book Investing in Rental Properties.
Cryptocurrency
This one is likely not new to anyone reading this post. However, we tend to look at crypto separate to the rest of your portfolio. When really we need to see what percentage of our entire investment portfolio is accounts for.
Here's the bottom line with crypto - even if you were to consider it a "risky investment" then allocating 10% of your investment portfolio is well within the suggested parameters from financial advisors around the world. That is the amount they recommend for "speculative investments."
Heck, you can even take it a step further and use crypto do invest in stocks. Doing this gives exposure to both crypto and stocks at the same time. I use 1broker.com as you can use bitcoin to invest in stocks and currencies.
Conclusion
So remember to diversify between assets classes not just within assets classes. Remember a rising tide raises all boats, but a falling tide drops them too. Even if you have the best in breed in a specific asset class, it will typically still struggle if that asset class on a whole is in a bad place.
Quick tip complete!
Best Regards,
Disclaimer: All info herein is my opinion and for informational purpose.