“Don’t put all of your eggs in one basket!” You’ve probably heard that over and over again throughout your life…and when it comes to investing, it is very true. Diversification is the key to successful investing. All successful investors build portfolios that are widely diversified, and you should too!
Diversifying your investments might include purchasing various stocks in many different industries. It may include purchasing bonds, investing in money market accounts, or even in some real property. The key is to invest in several different areas – not just one.
Over time, research has shown that investors who have diversified portfolios usually see more consistent and stable returns on their investments than those who just invest in one thing. By investing in several different markets, you will actually be at less risk also.
For instance, if you have invested all of your money in one stock, and that stock takes a significant plunge, you will most likely find that you have lost all of your money. On the other hand, if you have invested in ten different stocks, and nine are doing well while one plunges, you are still in reasonably good shape.
A good diversification will usually include stocks, bonds, real property, and cash. It may take time to diversify your portfolio. Depending on how much you have to initially invest, you may have to start with one type of investment, and invest in other areas as time goes by.
This is okay, but if you can divide your initial investment funds among various types of investments, you will find that you have a lower risk of losing your money, and over time, you will see better returns.
Experts also suggest that you spread your investment money evenly among your investments. In other words, if you start with $100,000 to invest, invest $25,000 in stocks, $25,000 in real property, $25,000 in bonds, and put $25,000 in an interest bearing savings account.
A Review Of The Stock Market Crash Of 1929
The great Wall Street Crash just previous to the Great
Depression of the 1930s has become a part of North American
legend. People speak of the crash, its causes and its
consequences, with great authority, although few people actually
understand the fundamentals that led to the crash, and fewer
still the intricacies involved in it. This article will detail a
short review of the crash, analyze some of the myths evolving
out of this period in American history, and also answer some
questions such as why the crash happened, and if something like
it could happen again.
The crash began on October 24, 1929 and
the slide continued for three business days, ending on October
29 1929 (as we can see, the crash did not occur in the ‘30s, as
many people believe). The first day of the crash is known as
Black Thursday, and the last day is called Black Tuesday. The
crash began when a rush of nervous spenders panicked and rushed
to sell their shares- over 13 million stocks were sold on that
first Thursday. In an attempt to halt the slide, several bankers
and businessmen gathered and tried to rally the numbers by
buying up blue-chip stocks, a tactic that had worked in 1909.
This was to prove only a temporary fix, however. Over the
weekend, while the stock markets were closed, the media added to
the fear of investors as the published the wrap ups to the week.
By Monday, a fearful populace, nerves on edge due to the
reports, were waiting to liquidate. Again, industrial giants and
other businesses tried to halt the panic by demonstrating their
faith in the system by buying more stock, but the slide would
not stop. The market did not recover its value until almost a
quarter of a decade later.
As with any legend, the Wall Street
Crash of 1929 carries with it several mythical misconceptions.
To start with, the Crash did not lead to the Great Depression.
In fact, many financial analysts and historians are still not
sure to what degree the Crash even contributed. The economic
forecasts were poor before Wall Street fell, and it was poor
people who could not even afford to think about stocks that were
the most affected by the Depression. For these people, poverty
was mostly caused by very poor farming conditions. There was
also not the onslaught of suicides that is commonly referred to-
a few investors did succumb to depression, but their numbers are
generally agreed to have been very small indeed- enough to count
on one hand.
What was it that caused this Crash? Because the
market had been doing so well, many Americans were investing-
many more, in fact, than could afford it. These people were
investing on speculation. This means that they were buying
stocks with an eye to selling them in the future for a higher
profit, and to achieve the capital to invest they borrowed from
banks. When prices began to drop, people realized they would not
be able to pay their debt, let alone make any money,. They
rushed to get out as soon as possible. To prevent panics such as
this in the future, buying on speculation is now illegal.
Depression of the 1930s has become a part of North American
legend. People speak of the crash, its causes and its
consequences, with great authority, although few people actually
understand the fundamentals that led to the crash, and fewer
still the intricacies involved in it. This article will detail a
short review of the crash, analyze some of the myths evolving
out of this period in American history, and also answer some
questions such as why the crash happened, and if something like
it could happen again.
The crash began on October 24, 1929 and
the slide continued for three business days, ending on October
29 1929 (as we can see, the crash did not occur in the ‘30s, as
many people believe). The first day of the crash is known as
Black Thursday, and the last day is called Black Tuesday. The
crash began when a rush of nervous spenders panicked and rushed
to sell their shares- over 13 million stocks were sold on that
first Thursday. In an attempt to halt the slide, several bankers
and businessmen gathered and tried to rally the numbers by
buying up blue-chip stocks, a tactic that had worked in 1909.
This was to prove only a temporary fix, however. Over the
weekend, while the stock markets were closed, the media added to
the fear of investors as the published the wrap ups to the week.
By Monday, a fearful populace, nerves on edge due to the
reports, were waiting to liquidate. Again, industrial giants and
other businesses tried to halt the panic by demonstrating their
faith in the system by buying more stock, but the slide would
not stop. The market did not recover its value until almost a
quarter of a decade later.
As with any legend, the Wall Street
Crash of 1929 carries with it several mythical misconceptions.
To start with, the Crash did not lead to the Great Depression.
In fact, many financial analysts and historians are still not
sure to what degree the Crash even contributed. The economic
forecasts were poor before Wall Street fell, and it was poor
people who could not even afford to think about stocks that were
the most affected by the Depression. For these people, poverty
was mostly caused by very poor farming conditions. There was
also not the onslaught of suicides that is commonly referred to-
a few investors did succumb to depression, but their numbers are
generally agreed to have been very small indeed- enough to count
on one hand.
What was it that caused this Crash? Because the
market had been doing so well, many Americans were investing-
many more, in fact, than could afford it. These people were
investing on speculation. This means that they were buying
stocks with an eye to selling them in the future for a higher
profit, and to achieve the capital to invest they borrowed from
banks. When prices began to drop, people realized they would not
be able to pay their debt, let alone make any money,. They
rushed to get out as soon as possible. To prevent panics such as
this in the future, buying on speculation is now illegal.
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