How To Diversify Your Investment

Getting a good mixed of investments is necessary to take advantage of the ups and downs of various investments at different times. If you have put all your money in stocks only, your investment would have lost much of its value during the 2008 financial crunch. This is especially so if those shares were in financial institutions and any corporations whose business was somewhat linked to or affected by the sub prime real estate scandal. On the other hand, if you had invested in other types of investments such as gold bars or silver bars at that time, you would have seen the value of your investments soared.

So do you invest in stocks now since the stock markets such as the Dow Jones Industrial Index of all the large corporations listed on the New York Stock Exchange has been hitting record breaking numbers this past year? Or do you go for gold bars since gold was at a historical high not so long ago and is still looking pretty good as an investment? How about bonds? Real estate market is showing sign of recovery after the crash in the sub prime housing bubble. Would that be a decent place to park your savings? With stocks crashing in times of a recession or gold prices settling in periods of doldrums in the past or even real estate crashing through the roof, perhaps keeping the money in the bank would be safer.

There are different takes on which investment gives a better return or when is the best time to invest in this or that investment. The opinions and advice vary depending on who prepared the investment reports. If an analyst is writing for the real estate industry or on behalf of a financial institution that offers housing loans, the investment report would probably sway in favor of their employer or sponsor. Major investment firms also publish their own reports. Whether they reviews and recommendations are objective and fair can be determined from browsing through the list of companies they have invested. Therefore, if you are planning to invest in the stock market or the stock of a specific listed corporation, it may be prudent to read several reports and analysis from different publications in order to obtain a more objective and broader perspective of the trends and projected direction as seen in the eyes of professionals.

In order to weather through unexpected turns of events that are capable to causing fluctuations in a particular market, it is advisable to spread your investment risks in different baskets. The proverbial advice not to put all of the eggs in one basket seems to be a great investment strategy. A healthy investment portfolio has different types of investments that are able to leverage against unexpected rise or fall in one or more markets. How much of stocks, bonds, property, cash or gold to hold at any one time is a balancing act that is best discussed with a professional investment adviser who needs to know how much risk you can take comfortably, your investment goals and your investment period.