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| Is Diversification the Way to Go? |
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| Written by Jan Shimano |
| Monday, 02 March 2009 11:38 |
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I have been very concerned lately as I watch my investments vanishing before my very eyes. I am not an experienced investor, so I felt the need to go searching for some satisfactory answers. It has been my experience that whenever I am motivated to seek an answer to a question, that answer invariably appears, and so it was with my search. I had read Rich Dad Poor Dad by Robert Kiyosaki a number of times and found it very informative. A friend of mine recommended I read his book, Rich Dad's Prophecy, so I ordered a copy. That book was a major eye opener for me. We are all aware of the cyclical nature of the stock market. We expect it to go up, down and sideways. However, in the long term we always expect to see a gradual incline. Normally, if we were to look at a graph covering many years, we would see an upward motion. We are seeing quite a different picture these days and it is a rather frightening situation. The first of the 75 million baby boomers in the U.S. are going to be turning age 70 by the year 2016. The U.S. has a law on the books that states that when a person reaches age 70 1/2 they have to take all their funds out of their 401k. The time to pay 'Uncle Sam' will have arrived. Just think for a moment what that is going to mean. There are going to be literally millions of people selling off large holdings, because they have to. Can you imagine what that is going to do to the stock market. For the market to go up, we have to have more buyers than sellers. For it to remain the same, there would be about the same volume of sales to purchases. So, with way more sellers than buyers, the market is going to take a huge hit, and there doesn't appear that there is anything that can be done about it. I suppose it's possible that the Government will step in with another law allowing people to keep their money in their retirement fund longer. However, this will just delay the inevitable. Even though most people realize they are in financial trouble, they don't understand the full impact. The advice they are being given is to still diversify, sit tight and ride out the storm. A great number of them seem to be following that advice, but this is what Warren Buffet says about diversification...."Diversification is a protection against ignorance. It makes very little sense for those that know what they are doing". We still have a few years before 2016 is upon us, so there is still time to get a firm handle on your finances and make some intelligent decisions. Educate yourself on financial matters and take action now to accumulate additional funds to see you through to your retirement and beyond. The experts tell us that having a home-based business is the best way to do this. The prediction is that there are going to be millions of new millionaires created during the next 10 years. You can be one of them...there are many great opportunities out there....find the one that resonates with you and run with it. About the Author: Jan Shimano was District Manager for Health & Welfare Canada for a number of years. She was also self-employed as a Nutritional Consultant. She is presently a Business and Health Coach and runs her own internet marketing company from her home on Vancouver Island. Jan also invites you to drop by and visit her on YouTube at www.youtube.com/1jinny Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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