How to Be Truly Diversified

Let’s talk about diversification and how to be truly diversified. And I know many of you are you saying there Art, I have this beautiful pie chart on my statement. I have all sorts of colors on it. I’m diversified. I’ve got stocks. I’ve got bonds. I’ve got cash. I’ve got gold. Inside my stocks I’ve got large cap, small cap, medium, international. My pie chart looks beautiful. I’m diversified. Maybe you are. But I want to challenge you a little bit today to think a little bit outside the box when it comes to diversification. And I’m going to give you three different things to consider. One, principal protection. Do any one of the little pretty pie chart colors that you have offer principal protection? No loss and potentially some growth? Something reasonable, not just cash, right? So sometimes in retirement folks like to have that principal protection peice where they know, no matter what the markets are doing, there’s some common ground there. There’s something that’s not going to waiver in value in having that. Not everybody and there’s different instruments out there that can achieve that at various different times what may or may not be appropriate for people and that would be discussed you know at each individual circumstance. So one, principal protection. Two, asset allocation. When I’m talking about that, there’s two pieces of it that are a little bit maybe outside of what you’re thinking. One, management style, active, passive. Different fundamental based managers, different tactical. Some have trends. You know what management style is built in your portfolio? And do you have diversification of the styles? Meaning not just all passive or not just all active. The actual style of management inside of that and what they’re picking. The second is placement of the different investments. Some investments work better in tax qualified accounts: IRAs, Roth IRAs. Some assets and investments work better in non-qualified. So as you’re having, if you’re fortunate enough to have different tax qualified strategies, think of how you’re placing these different investments and strategies inside of them. And finally, alternatives. You know there’s many different options out there when it comes into this world and some may or may not be appropriate. But once again consider this. When you’re talking about true diversification and you hear that word and you see your pie chart, don’t just get stuck in your typical stock, bond mix. As we’ve seen recently in the markets that stocks and bonds can go up and down in value and sometimes move fairly cohesively as well. They don’t always work in unison like we were once led to believe. So when you’re thinking of diversification, again think outside of the box. When you’re heading into retirement, that diversification may change for you. If you love to talk about your investments and walk through that, give us a call at the number on the screen. We’d love to sit down with you with a free, no cost, no obligation visit so we can walk through this and see how diversified are you and if it matches up with your goals.