Creating a Balanced Investment Portfolio

You have likely heard the old saying, ‘Don’t put all your eggs in one basket.’ This summarizes the entire philosophy of a diversified investment portfolio. The idea is to spread out the risk. You do not want to have 100% of your investment capital riding on a single investment. For example, you would not want to have your entire investment portfolio allocated to commodities. This might represent very slow growth and/or improper risk allocation. Likewise, you would not invest 100% of your capital into penny stocks that may go up and down in value just as quickly as the wind blows. Maintaining a diversified investment account will allow you to reap the benefits of multiple investments while at the same time protecting yourself from a single catastrophic loss if one of the investments happens to tumble.

Stock Market Investing Is A Fundamental Element Of A Diversified Portfolio

The United States stock market has increased in value, on average, about 11% since the 1920’s. This includes the time of the Great Depression, the stock market dive of 1987 and the dot-com crash of more modern times. Over time, the stock market increases in value. Those who invest in the stock market are in a position to benefit from this slow increase in value. Those who invest for the long-term are most able to capitalize on the growth of the stock market. It is a fundamentally sound investment when done properly. There are number of ways to invest in the stock market including mutual funds, spider funds, and stock indexes, to name just at few of the methods. Individual stock purchases can also be profitable if done correctly. As always, talk with an investment adviser about your options and how stock investment fits into your overall game plan.

Penny Stock

A more specific type of stock market investing revolves around penny stocks. These are stocks that have a small price tag and potentially a significant return. However, the potential also exists for significant losses if prices go against you. For this reason, penny stocks are generally considered to be a risky investment and are not suitable for all investors. The appeal of the penny stock is to ‘find the next Walmart.’ What this means is that the investor (or perhaps in this case the speculator) is looking to buy a company stock for a very small amount of money (perhaps just a few pennies) in the hopes that it may soar to be worth several dollars per share in the future. This is generally the fundamental game plan with a penny stock.

Mutual Funds Investing

Mutual fund investing is another one of the ways to invest in the stock market. Mutual fund exist for the purpose of spreading out risk. By their very nature they are designed to help increase overall portfolio returns while at the same time reducing overall risk to investment capital. The way this is achieved is to spread out the mutual funds overall portfolio into a number of different stocks. This diversification can help with risk reduction. People enjoy investing mutual funds because it allows them the opportunity to invest in a number of different companies all at the same time. It also allows for their money to be managed by a skilled professionals so that as individuals they do not have to do the decision making themselves. For these reasons it is easy to see why mutual funds have a very broad appeal and are one of the most popular investment opportunities available. Bear in mind that just because a mutual fund has done well in the past does not necessarily mean that they will continue to do well in the future. This is one of the challenges common to mutual funds.

Value Investing

Value investing is generally a broad definition of investing done by purchasing companies that have fundamentally sound value. In other words, a company that displays consistent earnings and offers a good value for the price of the shares offered would represent a company fitting into the category of a value investment. A number of fundamental investors organize their portfolios according to a value investing approach. Buying stocks that are of good value can represent a fundamentally sound investment strategy.

Bonds Investing

When you talk about bonds investing you generally think of safe and secure investments, and for good reason. Bonds generally represent one of the safest investments available. A bond is something like a promissory note. A company or government might issue a bond in order to raise funds for a particular project. When raising the funds, the entity will offer a bond containing a specific investment return which is to be repaid to the investor according to the term and length of the bond. It is something like lending money to a company and then giving you a specific return on your money. This can represent one of the safest forms of investments and likewise is popular for many people.

Commodities Investing

Commodities can represent one of the more confusing types of options available for investors. It is best to consult with skilled professionals and financial advisers when it comes to the topics of commodities. Commodities can be viewed as both a high risk opportunity as well as a safe and secure opportunity for financial returns. It depends on the approach first and foremost. Many investors view commodities as a hedge against their other investments-designed to provide a counter-cyclical approach to investing that can help diversify overall risk and returns.

Consult With An Advisor

Consulting with the skilled investment adviser is one of the best options that any investor can take before allocating their money. It is a good idea to diversify, but if the diversification is done without a systematic game plan than the results can be less than spectacular. A solid game plan, rolled out over a long period of time can be one of the best approach is to systematic, long-term investing that will yield fruitful financial returns. Long-term investing should be the goal of almost every investor looking to double and triple their capital in the years ahead. Begin first by talking with your investment adviser about a systematic game plan for your investment blueprin

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Investing Essentials – Balance Your Risk By Using Varied Investment Vehicles

Investing is such a complicated field that there are literally tens of thousands of books written on the subject. Investing can be quite difficult, depending on the strategy, though it and can also be simple and straightforward if done properly. One of the best pieces of investment advice ever given is to diversify your portfolio into several different investment vehicles. This can help you spread out the risk and achieve a steady return on your investment capital. This is the goal of most investors. This type of investing can be categorized broadly as value investing and with a diversified investment strategy that holds a goal of long term positive returns.

Value Investing
On the whole, value investing is generally defined as investing that focuses on buying investments that have good value. This is a fundamentally safe and secure type of investment strategy. The goal is for steady appreciation and consistent yields on capital invested. Value investing is a fundamental and lies at the base of a solid financial investment plan. Buying investments because they are a good value is a mark of a solid investment plan. If you buy companies because they are good value, then chances are you will be in a position to enjoy capital appreciation in the years to come.

Stock Market Investing
Stock market investing is one of the fundamentals of value investing. By diversifying investments into the stock market it is possible to spread out investment funds into a wide variety of different companies and their stocks. It is certainly very difficult to choose specific stocks that are going to go up in value immensely in the years to come. The Walmart-like stocks are few and far between and taking them at their outset is almost impossible. This certainly does not mean that you should not try. Buying fundamentally sound stock market investments can be a goal and ticket to a fruitful financial future ahead.

Penny Stock Investments
Penny stocks are those that bear their own name. These stocks are often valued very lowly and the costs are often quite low-often times ranging from a few pennies per share up to a couple dollars per share at the most. Some investors believe that there is great potential return in penny stock investments because you can buy for such a low cost a large amount of shares and if there is any appreciation in value this year value will likewise increase. An increase in the share value will yield an increase in the investment return as well.

Bonds Investing
Bonds are another core element of a diversified investment strategy. Bonds typically have slow and steady growth patterns and consistent yields year after year. This makes them the ideal investment for slow and steady capital appreciation. There are several different types of bonds available ranging from government-backed bonds to higher risk corporate bonds. Bonds remain one of the best ways of diversifying a portfolio with safe and secure investment returns. Talk with an investment adviser about the different kinds of bond ratings and how the different types of bonds will play an important part in your overall investment portfolio.

Mutual Funds Investing
Mutual funds are yet another way of diversifying investment risk and return. Some mutual funds specialize in high risk/high yield type investments, while others mirror segments of the stock market (as in Spider Funds, which buy the exact companies that appear on certain stock indices). Mutual funds are run by a board of directors and a management team in most cases. These individuals have the responsibility of making the investment choices for the entire fund.

Mutual funds are traditionally one of the most popular investments options and routes to take. Mutual funds are easier to become involved with than almost any other investment. They are often times the starting place for investors who are looking to have the potential for return while also curving the risks in spreading out the potential downside. One of the challenges with mutual funds, however, is the fact that there are so many and they can be difficult to choose between them. Out of thousands of different mutual funds, finding one that meets your investment requirements can be tricky. It also should be noted that just because a mutual fund has done well in the past that does not mean that it will continue to do well in the future. Very few mutual funds maintain a steady track record over time.

Commodities Investing
Commodities are another option for a diversified investment portfolio. Commodities represent certain items like corn, oil, gold, silver, and other such natural items classified as commodities. Commodities can often be used as a ‘hedge’ investment and have a safe and secure track record. Investing in commodities should be done with the help of an experienced investment adviser only or with much experience under your belt. They are not typical investments and should not be viewed as ones that are as easy to invest in as bonds or mutual funds. Typically, commodities investments can be used as a counter-trend type of investment, or in other words, as a protection against loss when other types of investments seem to be falling. Commodities will typically hold their value contrary to the stock market as a whole.

All of these different types of investment options should be discussed with a qualified investment adviser or broker. To venture into these investments on your own can be dangerous. It should be mentioned that with any investment there is the potential for loss. Anytime you have the potential for substantial gain, likewise you have the potential for substantial loss. Some of these investments are more secure than others. You should discuss your options and your long-term strategy with your investment adviser to determine the best plan moving forward. You’ll want to create a diversified plan that creates a steady return while minimizing risks.

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