"More than ever, there is a need today for educated investment portfolio advice. Proper investment portfolio diversificationcan seriously change your retirement future and protect you from financial disaster.
The sad truth is that MOST people have been mislead into believing that they are properly diversified when the majority of us really are not.
Modern Portfolio Theory was developed as a solution to this problem."
Modern Portfolio Theory (MPT)
Modern Portfolio Theory is an investment portfolio diversification strategy developed by Dr. Harry Markowitz, PhD of the University of Chicago in 1952. He received a Nobel Prize in Economics for this breakthrough approach to "investment portfolio diversification and safe investment advice".
Modern Portfolio Theory is the framework upon which institutions such as Harvard and Yale universities endowment funds and some of the world's wealthiest investors construct their investment portfolio diversification strategies.
Dr. Harry Markowitz, PhD
Dr. Markowitz's investment advice was that investment portfolio risk could be reduced and expected rate of return could be increased when assets of dissimilar price movements were combined. According to Modern Portfolio Theory, this is accomplished by including 'uncorrelated' asset classes that move independently from one another.
"Most investors are under the delusion that they are adequately diversified if their investment portfolio includes a variety of stocks, mutual funds and bonds (i.e. Traditional Investments)."
However, the fact is that these traditional investments are in the same general asset class, with similar price movements, and typically move in concert with one another.
Approximately 96% of all Americans' Independent Retirement Accounts (IRA's) and 401k investment portfolios are entirely invested in"Traditional Investments" (e.g. stocks, mutual funds & bonds) with similar market price movements. As a result, these investment portfolios are at extreme risk in the event of a market downturn, which, if severe enough could wipe out people's lifetime savings and set them back many years in their plans and dreams for retirement.
"Investment Advice for Safer Investment Portfolio Diversification: ALL investors should seriously consider including "Alternative Investments" in their investment portfolios in order to be adequately diversified and protected when the market winds shift."
Alternative Investments
Following are examples of alternative investments which can be added for investment portfolio diversification:
Precious Metals such as gold, silver, platinum, etc.
Gemstones such as diamonds, rubies, etc.
Commodities
Oil & Gas
Tax Liens & Tax Lien Certificates
Trust Deeds
Tenancy In Common Properties (TIC)
Real Estate Investment Trusts (REIT)
Timberland
Fishing Rights in Alaska (no kidding!)
AND MANY MORE!
How to Invest Your IRA & 401k
in Alternative Investments
With regard to Modern Portfolio Theory, 96% of all Americans' IRA and 401k retirement funds are inadequately diversified. This is because "traditional" IRA's and 401k's are entirely invested in "traditional asset classes" such as stocks, bonds and mutual funds.
These traditional retirement funds and the fund managers are NEVER going to tell you that there is a way to more adequately diversify using "Alternative Investments" such as those listed above.
Why Not?
Because they can only earn commissions on the "traditional" investment products that their company offers.
What can you do about it?
1. Convert your "Traditional" IRA into a "Self-Directed" IRA.
2. Roll your 401k portfolio into a Self-Directed IRA account.
Why do this?
By converting and rolling into a Self-Directed IRA account, you can choose to invest in a whole new universe of "Alternative" Investments that were previously not available to you - allowing you to more adequately diversify your investment portfollio!
And, you can still invest in the same old "Traditional" investments you currently own - if you want to.
"How to Properly Diversify Your Investment Portfolio for Safe Investing"
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