True enough, problem is in today's climate, I'd be loathe to throw a wad of fiat into a locked-in term deposit that will mature (knowing Murphy's law) a week *after* the haircut courtesy of your local bail-in provisions because the Bank of We'll Look After Ourselves Thanks was considered "too big to fail".
It all goes down to how much wealth you have. And how much money you're willing to invest... If it's 5,000 $ or 10,000 $ or 50,000 $... The less you have, the more delicate issue this diversification is. If you're a lower-middle class person, then you'd better hold enough cash to be liquid - if needed. Anything that's a "plus" can be discussed: metals or anything else. I personally think if you have a bit more than "enough" and have already bought up metals, you can go into buying diamonds and other gemstones. Very delicate issue indeed. I personally like Kiyosaki's advice about real estate. Hold real estate and make it work for you like rent it out or re-sell or rotate your investments otherwise. Make money work for you... The more money you have, the more you can risk buying gemstones with, antiques. I personally think some bonds are also quite well-yielding: 5-10 % for 10 years, but there were plenty even above 10 %. And those economies were primarily emerging markets. Western bonds generally pay low and those economies have huge debt accumulate and the bond bubbles are blowing up... In conclusion - depending on the dimensions of your assets/wealth size, consider the following (when diversifying): -arable land (great asset, which some choose to rent out to agricultural companies) -buildings, homes (for real estate speculation) -venture capital (you might want to consider investing in start-up firms that look like they're "going to make it") -PM's (especially silver, gold, platinum, palladium) -gemstones (can hold a lot of value in small space) -antiques (you can speculate a lot with these, but re-selling might be difficult and you must learn a lot about them) -bonds ...etc.
Hypothetical: You have $200k and want to go 25%/25%/25%/25%. How do you get into real estate? REITS? Overseas property? Is there another way?
Depends if you own a place to live. If not I'd use the lot to buy a house and then gradually build up the other 25/25/25 over time
$200k / 25% = $50k.... that's a deposit to leverage off on an investment commercial or residential property.
Firstly apologies but I'm on my iPad so links & whatnot will be lacking There's Harry Browne's permanent portfolio. From memory 25% gold:cash:stocks:bonds. When I was doing my research on it it certainly appeares to work when back testing. The idea is you reweigh your portfolio at regular intervals (within a band). This way you take your "profits". Renovator wouldn't approve as MrBrowne didn't like investing in real estate for the permanent portfolio because it's not fungible. There are other similar ideas although Mr Brownes has the highest weighting to precious metals.
I personally see nothing wrong with the strategy of all your eggs in one basket. Its not for everyone but with a common sense approach liabilities can be limited to an acceptable degree..which of course is a subjective statement in itself. I don't see diversification as a superior strategy just the more commonly accepted one. A portion of my ex clients were all or nothing individuals seeing the failure of a business as just a stepping stone to the one business that would give them financial freedom for life. Each to the size of their own Kahoona's REDBACK
I reckon get out of debt is the best advice at the moment. Take advantage of low interest rates. Forget other investments.
I'm getting itchy feet. Patience is indeed a virtue, depositing cash is unrewarding at current interest rates.
The military build-up in the North should see prices boom. Consider getting on-board with DHA. A tleast with them, you get Guaranteed rent, a decent property and generally very good folk who rent the homes. https://www.dha.gov.au/investing
Different industry sectors mostly. So not all in banks or IT or Health or Mining etc. Looking at diversifying with international stocks though.
The larger your spread, the lower your exposure. My spread is 20% shares, 20% cash, 20% PM, 36% business, 4% charity. In shares, 10% AU, 10% international, across all sectors, percentages fluctuating while shoring up on the undervalued and selling off the overpriced. Cash is all AU at the moment to provide liquidity, but I'm studying up on Forex and will migrate into 10% AU, 10% international as time goes on. PM is 5% gold, 15% silver, 0% paper. Biz gets the bulk as it's only in the second year and still growing. As it's performance improves, I'll move the half the profits into property (commercial and/or agricultural. Will consider urban when the bubble bursts). Charity gets a small piece of the pie to keep me honest. I'm not a fan of doorknockers and tin shakers, because their organisational overheads significantly reduce the actual amount that ends up being used on the advertised project. My preference is to look for more direct methods like - https://www.indiegogo.com/projects/hopeful-packs-for-the-homeless or actually planting a few trees etc myself and writing off the cost of doing it (travel, time etc.). Generally not tax deductible, but better value for money even with that factored in.
What I like to do is form peer groups between the industries then go and look at a few things to actually see if that firm can be included into that peer group. After I figure out who is in the peer group I use the average of that peer I will compare firms I'm analyzing to that peer group. Sometimes a company who looks like they are in a certain peer group may not actually be in that group at all. Some of the things I may do is: look at a firm's annual reports to see their key competitors Use industry trade publications to identify key competitors Check their sources of demand, and check to see if they have similar sources of sales and earnings. I then pick out some stock that I like and figure out the correlation coefficient between those stocks then multiply those efficients by my portfolio weights to get my portfolio correlation. Anything close to -1 or 1 is bad and anything closer to 0 the better (but that's almost unlikely to happen because of systematic risk aka market/undiversifiable risk. Finding the correlation between your stocks will show you if you're actually diversified.
