New Book - Coming November 2010

New Book - Coming November 2010
Help! My 401(k) Has Fallen - And Must Get Up!

Friday, April 17, 2009

How Diversified Are You?

Diversification - Now there's a word you hear a LOT in the investing world. For those of you who may not have a Series 7 license - WHAT DOES IT MEAN in layman's terms? WHY is "diversification" important to me & my money?

Good question - Here's what diversification is NOT -
* Having Money at different banks.
* Dealing with different financial advisors.
* Owning CDs due at different times.

The simplest way I know of to define "Diversification" that most of us can relate to is this.

Think of your closet at home, where you keep your clothes. We all may prefer a different style or taste in clothing, but clothing generally falls into these main groups.

* Winter or cold weather wear
* Summer wear
* Spring wear
* Dress up or formal wear
* Casual wear
* Sleepwear
* Working clothes (Painting or yard work)
* Shoes
* Rain gear

In other words, different clothing for different occasions. No matter what's happening in your life or with the weather, you have clothes to wear that fit the situation. And we need to have the right amounts.

If you don't like the weather in Indiana, don't worry. It will change soon. It would be silly to own all t-shirts & shorts. Wouldn't it also be silly to live in Arizona, and own too much winter wear?

The same is true for investing. You need a full "closet" of clothing so that you are ready for whatever the economy is doing. That's how you minimize all the types of risk.

Talk with your advisor today to make sure your "closet" is full of the right financial "clothes".
(Is it time to get rid of the Nehru Jacket & Leisure Suit yet?)

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