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Summary: This 980-word articles explains why it's important (and advantageous) to diversi y your port olio!

especially when you are planning or retirement" This article has also #een optimi$ed or the %eyword! &retirement"& 'iversi ication: (our )est *lanning Tool or +etirement (ou,ve heard the old adage! -'on,t put all your eggs in one #as%et". / you are presently in the process o planning your inances with an eye on retirement! you need to %eep this saying in mind" 0ust thin% 1 i the #as%et containing all the eggs you had care ully gathered rom under the hens were to all on the ground! most! i not all! o the eggs would #e #ro%en and unusa#le" 2ow let,s translate that image into inancial terms" To put it #luntly! i all your assets are invested in one area ( or example! stoc%s or real estate)! and i the stoc% mar%et or the real estate mar%et were to -crash. 1 all to recession or even depression status! or whatever reason 1 all your dreams and hopes or a com orta#le retirement would #e gone" 3ase in *oint: The -'ot-3oms. (ou pro#a#ly recall the dot-com #u##le o the late 4900s! which was later re erred to as the dotcom #ust" 5 #u##le in the stoc% mar%et is a rapid and sel -perpetuating #oom in a particular industry (in this case! the in ormation technology industry)! with share prices or stoc%s in the industry,s various companies showing a spectacular rise" Speculators #uy as prices are going up! in anticipation o urther increases! and many companies #ecome extravagantly overvalued" The #u##le always -#ursts. at some point when a level o critical mass is reached" 6hen that happens! prices o shares go plummeting! and many companies are orced to declare #an%ruptcy" That,s exactly what too% place #etween 4997 and 8004" Stoc% mar%ets in the 6estern countries grew dramatically in value as do$ens and do$ens o new /nternet-#ased companies were ormed" These were the -dot-coms!. the darlings o venture capitalists in a lourishing and #uoyant environment" 9ounders o a ew o these /nternet companies made huge ortunes #y selling the companies early in the stoc% mar%et #u##le" *ersonal investing in these companies reached unprecedented levels: and so! when it all ell to ruin in 8004! many people learned sad #ut valua#le lessons a#out putting all their inancial assets in one type o investment" / you don,t remem#er -The 3rash. o 4989! surely you,ve heard a#out it" /n act! we,ve all heard a#out it during the all o 8008! when uneasy parallels have #een drawn #etween Then and 2ow" Su#prime mortgage lending and the sudden closing o many #an%s and insurance companies that had over-extended themselves over the past ew years have le t many people ;o#less! and many others rantic with concern over their inancial security" <eavy hits have #een ta%en #y many investors" / all or most o your investments were in real estate! you are pro#a#ly wishing you hadn,t put so many eggs into that #as%et" 6hile inancial experts are cautiously predicting a gradual improvement in the situation in the next year or so! there,s no getting past the act that #elt-tightening is going to #e in ashion or some time" This may #e ;ust the right time to have a tal% with your inancial advisor a#out ma%ing some changes in your retirement investment plan! and spreading those -eggs. around a #it"

6hat 'oes -'iversi ication. +eally =ean> 'iversi ication is simply putting some o your assets here and some o them there! so that your ris% o losing everything is diminished" =any inancial experts recommend that i you,re currently planning how to und and inance your retirement! you ta%e a pass on gam#ling and adventure" ?eave the wilder side o speculation 1 li%e securities! or example 1 to those who can a ord to lose a he ty chun% o their assets" @specially i you,re a novice investor! securities are pro#a#ly too ris%y or you to handle" / you insist on trying your hand at securities investment! at least #e certain to %eep the lion,s share o your money in lower-ris% investments li%e mutual unds or government #onds" 5nd i you are anywhere near the age when you plan to retire! orget a#out securities altogether" 6hat are =utual 9unds> 5 mutual und is an investment company that puts together money rom many investors to purchase a diversi ied group o assets such as stoc%s! #onds! and money mar%et instruments" These com#ined holdings are called the company,s port olio" @ach investor owns shares o the port olio (thus the term shareholder)" =utual unds are sometimes called open-end unds" =utual unds tend to #e somewhat sa er than investing directly in stoc%s yoursel " 6hy> )ecause they are diversi iedA B course! there are never any guarantees when it comes to investments! #ut mutual unds are de initely among the least ris%y o the possi#le choices" (our inancial advisor can explain mutual unds to you in great detail! and can ma%e recommendations among the many! many mutual unds that are availa#le" The term all-in-one und re ers to a collection o mutual unds that provides you with a diversi ied port olio in a single investment" The assets in these unds include several di erent asset classes! and there#y allow your money to grow in several di erent directions" Bne interesting eature o all-in-one unds is that they #ecome more conservative the longer you hold them" That is! as you grow older! and more vulnera#le to losses! the investments in your und will #ecome less and less aggressive! protecting your money while still allowing it to grow slowly" 3onclusion The #est move you can ma%e when it comes to planning your retirement inances is to esta#lish a relationship with a reputa#le inancial advisor" Select someone who has a lot o experience with retirement planning: some advisors speciali$e in wor%ing with older clients! and can guide you through the ma$e o options with sensitivity" (our inancial advisor will agree that the sa ety net or your assets will #e much wider i you diversi y your port olio! putting a little o your money in several distinct types o investments"

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