Diversify investments with stocks, real estate, bonds, etc.
The old saying "Don't put all your eggs in one basket" is especially true when it comes to investing. If you put all your money in one type of investment, what is going to happen, when that one investment goes down in value? This is why, it's important to put your money into few different assets: stocks, real estate, commodities, bonds, fixed income accounts. In this case, if one investment goes down in value, you will loose much less.
StocksDiversification is especially important for stocks. Countless number of people lost everything when they invested all their money in seemingly safe stocks like Lehman Brothers, Worldcom, Enron. Even putting all your money into just one investment fund is dangerous. Medoff proved it.
There are great and cheap ways to diversify your stock market investments. These are no-load mutual funds, index funds, ETFs (our favorite) and target funds.
Real Estate.Robert Kiyosaki claims, that most rich people have their money in the real estate. There is definitely value in this approach: real estate cannot devalue to nothing like stocks could. And real estate, at least, protects you against inflation. There is also another way to invest in real estate without having to go through pains of actually owning the property. It's buying REITS.
Commodities. You could invest in commodities without actually buying barrels of oils, pounds of gold and tons of steel, then storing them in spare room in your house. You could buy stocks in companies that produce these commodities. There are also ETFs that follow different commodities, like GLD for gold.
Diversification is the main tool to spread and lower the risk and protect your money.
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