Diversification Strategy

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The wise investor selects from a variety of options, understanding the limits of each, whether the market is a bear or a bull market or making the transition. For example:

• A mix of equity and fixed-income debt bonds is often advocated. Don’t put all of your stocks in the same industry, company, etc. When choosing bonds, remember if interest rates go up, the value of the bonds goes down.
• Metals and real estate both can be good investments but they require finding buyers to be able to turn them into cash.
• Mutual funds can be redeemed from a mutual company so you don’t have to find a customer.

When you have only a small amount of money to work with, you have fewer options available. Don’t be discouraged. Working with an experienced financial planner such as Agape Insurance and Financial Services will help you devise a strategy that will allow you to recognize when you can take the next step toward your goals.

Remember to continue to add to your portfolio on a regular basis as you pursue a diversification strategy, particularly if you are employing an active investment strategy. You may be able to purchase great assets at a lower price when others are scrambling to liquidate or as the markets are just beginning to recover. You may also catch investment opportunities when they are rising in their life cycle rather than after they have peaked.

But remember, diversification and asset allocation strategies do not ensure profit or protect against loss.