Diversify Your Portfolio This Year
Every keen investor – and even the not-so-enthusiastic investor – knows all about diversification and why you need to do it. It’s essential to have stocks from several different industries and sectors, as well as cash bonds, mutual and some commodities. This spreads your risk out so that if one sector takes a serious dip, the rest of your portfolio holds firm, and in some cases, actually rises as a result of the falling sector.
Diversification is never more important than in times of economic uncertainty and it’s actually the best time to invest in tangible assets like gold bars from Golden Eagle Coin. When industry takes a hit or when commodities are unstable, tangible assets increase in value, helping to maintain the overall health of your portfolio.
Why you need to diversify beyond regular stocks
Too many people think of diversification only in terms of sectors and commodities, without ever actually holding the “real” thing. While it’s great to have a wide range of industries when the going’s good, when there’s the chance of a serious market correction you need something real to hold onto. This is one of the reasons more and more sensible investors are turning to gold, silver, platinum and the other precious metals.
What tends to happen in a market correction is that some investors panic and pull their money out of their regular stocks, usually reinvesting it into precious metals, which in turn reduces the supply of metals, pushing the prices up.
If the economy does take a tumble, or if there’s sudden high inflation, precious metals aren’t at the same risk as the dollar-linked investment vehicles and commodities. During the 2008-2009 global financial crisis, gold out-performed almost all stock-based portfolios. With uncertainty growing, now is the best time to bring some precious metals into your portfolio, before their unit prices start to rise steeply.
You should also look to diversify your metals
Gold and silver are good metals to start off your diversification project with, but you should also add palladium, platinum and even copper. You also need to diversify in terms of the size of your bars and coins. Small silver bars, for example, are great when it comes to smaller purchases and trades, like groceries or other supplies, whereas larger gold bars could be exchanged for vehicles.
This is, of course, only really applicable if the economy really does crash. Chances are that in a few years you’ll be looking at an untouched stash of precious metals that’s increased in value and that you can sell off – in part or altogether – at a decent profit.
Holding the lesser-used metals – palladium and copper, for example – is always a good idea just in case silver tanks. At present the value of silver is held up by its growing usage in medicine and industry and if we really do have a serious global economic scenario, silver may lose value, so it’s good to have a few more metallic tricks up your sleeve.