Retirement Planning & Portfolio Diversity

The estate planning attorneys at Davidson Law Group understand you want to have a lot of assets to leave for your loved ones after you pass away. There are specific strategies you can utilize to achieve this, one of which is to diversify your portfolio. We explain some tips for diversifying your retirement planning portfolio in today’s blog.

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Why Diversify?

Diversifying your portfolio is all about mitigating risk. If you put all of your nest eggs in one basket, you risk losing a lot of your assets if that investment fails. A diverse portfolio has a better chance of surviving a loss versus one that’s all-in for one particular investment for retirement planning.

What a Diverse Portfolio Looks Like

Diversifying your portfolio doesn’t mean you should simply buy stocks from 10 different sectors of the economy. For this type of retirement planning, you should purchase various kinds of investments beyond stocks. Don’t put more than one-third of your assets into one particular type of investment.

For a diverse portfolio, consider the following types of investments:

  • U.S. Equities
  • Real Estate
  • Private Equity
  • Gold
  • Natural Resources
  • Hedge Funds

U.S. equities refer to items you can trade on a public market. Stocks, bonds, treasury notes, and more fall into this category. Real estate refers to land or your home. Private equity means investments that aren’t traded publicly, such as your savings account, certificates of deposit, or owning shares of private companies. 

You can buy actual physical gold, or you can purchase stock in gold companies. Natural resources are all about oil, metals, minerals, and commodities like timber. Many mutual funds specialize in natural resources. 

Lastly, there are hedge funds. Hedge funds carry more risk, but the rewards can be great. Hedge funds invest aggressively over long- and short-term periods to try to maximize investments. A hedge fund can increase your retirement planning portfolio very quickly, but it’s also prone to volatility.

How to Invest Wisely

Do your research on each investment as a part of your larger portfolio and your goals for retirement planning. How long has the company been in existence? What do their customers say? What financial clout does the company have? Consider talking to a professional wealth advisor for best results.

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Retirement Planning & Davidson Law Group

Davidson Law Group can help you with retirement planning and portfolio diversity when it comes to optimizing and managing your estate planning. Contact our law firm today in Fort Worth, Allen, or Tyler if you have any questions.