The Key Is Diversification

To many investors, when asked what are the ways to save and invest for the future, they would probably say stocks, shares, retirement plans such as the 401(k) or IRA accounts, bank deposits and Treasury bonds. Experienced investors would have a mixed of investments consisting of a combination of any of the above. Having a diversified investment portfolio is the key to having a balanced investment strategy. There are various formulae that investment experts tout as the “best” or the “most viable”. They usually recommend that an investment portfolio should have a certain percentage of stocks balanced with bonds, cash and property taking up the remainder in different proportions.

The avenues for investing your money are endless. Buy gold or other precious metals such as silver or platinum if you want to further diversify your portfolio. Gold and silver and to a lesser extent other precious metals have been used for investment purposes. They can be purchased as gold or silver bars. We are more familiar with seeing gold, silver or platinum in the form of jewelry or when they are used to accentuate the finishing such as gold coated taps or brass plated door knobs. However, gold and silver can also be purchased as bars or ingots from retail dealers. These dealers also sell bullion coins and collectors coins that are minted in gold or silver.

If you do not wish to hold physical metal in your collection, there are other ways you can invest in precious metals. One of them is to own shares in mining companies. The shares of these companies are listed in the stock exchanges and can be purchased through brokers. You may also buy into mutual funds that invest in the mining companies. Additionally, there are banks that issue gold certificates or silver certificates. When you next step into a bank, you could inquire whether they have gold or silver certificates available.

Why diversify? The answer is to have a balanced portfolio. When one type of investment is not doing well, you may take comfort that other investments in your portfolio are not affected. For example, when the stock market takes a plunge and this drives down the value of your stock portfolio, you may find that the gold bars or gold certificates that you own may be worth more than before. This actually happened during the 2008 recession when the housing bubble burst and the financial market collapsed. Stocks took a nose dive especially those that are involved in lending in the subprime property market. On the other hand, prices of gold and silver peaked to one of their highest in recent years. Therefore, if you have a portfolio in stocks only, you would have lost much of your investment. However, if your investment strategy is for a balanced portfolio of a mix of investments, what you would have lost in stocks is balanced by the rise in value of gold or silver.

An experienced financial planner or investment adviser will be able to help you plan an investment strategy that is diversified and balance. Investment should be made with a view for long term gains. Having a sound investment strategy will help you to achieve that.