Monday, March 3, 2008

Diversify Your Financial Plan

Are you diversified? When investing in the stock market, we’ve all heard it's wise to limit risk by balancing your asset allocation between stocks, bonds, and cash. It’s also wise to balance your investments globally between different industry sectors and company sizes.

But are you diversified beyond your investments? Do you have a diversified financial plan? Or is your net worth comprised of a single asset, like your house?

A diversified financial plan should have a comfortable mix of assets spread among your retirement accounts, real estate investments, your personal business assets, and cash. A diversified financial plan also isn’t complete without sufficient life insurance, disability insurance, health insurance, and a will.

Like a diversified investment portfolio, a diversified financial plan will help you to reduce risk. Remember, “don’t put all your eggs in one basket." Take a hard took at all your assets and start to diversify today.


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The articles on Daily Money Tips reflect the opinion of its author only and should not be considered professional financial advice. Please consult a financial professional before making any major financial decisions.