How Do You Diversify When Investing Money?
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How Do You Diversify When Investing Money?
Investing money is not limited to just stocks, bonds, and mutual funds. In fact, if you tie all of your investing to Wall Street, you could be in trouble when the market goes on a real bear run.
The successful investor knows that diversification goes beyond having a diverse portfolio of stocks, or having a mix of stocks and bonds, or even having a diversified mutual fund with stocks and bonds of all different sorts. To be really diversified when investing money, you need to move beyond Wall Street, and consider Main Street.
Have You Considered Investing Money in Real Estate?
People began heavily investing in real estate right after the dot-com bubble burst, and this caused home values to go through the roof. However, the housing market has been cooling recently, and home prices are on the decline.
If the trend continues, a savvy investor would wait a few more months and then begin investing in real estate! After all, the popular saying in real estate is, “you don’t make your money when you sell, you make your money when you buy” – and you do this by investing money when home values are down.
If fixing toilets and dealing with tenants isn’t for you, consider investing in real estate investment trusts (REITs). REITs trade on major exchanges, right alongside stocks, but this doesn’t make them equally susceptible to market crashes.
In 2002, while the Dow Jones Industrial Average plummeted, smart investors were investing money in REITs – and they made a killing. One reason is that REITs have what Wall Street insiders call “downside protection,” meaning that they can only go so low.
The reason is that REITs have to distribute 90 percent of their investment income back to shareholders. When you buy REITs, you’re buying a fat monthly check – almost like rent, but without the toilets and tenants.
How About Investing Money in a Small Business?
Another way of diversifying your holdings is
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