Boulder City Magazine® November 2010 Issue
by Wendell Whitman
Avoid Dangers of Over-Concentration
In most of your endeavors, concentration is essential for success. However, as an investor, you may find that you actually don’t want to concentrate too much. Specifically, if you over-concentrate your money in just one or two types of investments, your portfolio could take a hit if a downturn affects those investments.
Boulder City Magazine®
|Try to own a range of investments, which may include stocks, bonds, government securities and certificates of deposit.
While this type of diversification cannot, by itself, guarantee a profit or protect against loss, it can help reduce the effects of volatility on your portfolio.
And within your diversified portfolio, you’ll want to allocate your investment dollars in a way that reflects your goals, risk tolerance and time horizon.
By concentrating on a solid investment strategy instead of over-concentrating on a specific type of investment, you’ll be able to focus on pursuing your objectives.
Think Twice Before Joining the “Gold Rush”
When the financial markets become volatile, many people purchase gold. But is it the right choice for you?
Keep in mind that gold prices do not always go up. Consequently, if you bought a gold futures contract, you could lose money if gold prices fall, because you’ll still be obligated to complete your contract at the higher, agreed-upon price.
And if you purchased gold coins, bullion or bars, you’d face storage, security, insurance and liquidity issues.
Given these drawbacks to investing in gold, what can you do to fight back against market volatility? You can diversify your holdings among a variety of stocks, bonds and government securities.
Keep in mind though that diversification by itself cannot guarantee you profits or protect you against certain types of losses.
So, try to avoid the allure of gold as a “quick fix.” Other investments may be less glitzy and glamorous, but they have their own sparkle.
Contact Wendell at Edward Jones www.edwardjones.com.
P.O. Box 61901
Boulder City, Nevada 89006
Phone (702) 294-1392 Fax (702) 294-1392
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