UlTImATE SUccESS GUIdE
- sIMPlICItY UsUAllY WoRks Best
If you are like many people your investments look like a Hodge-
podge of things you picked up along the way. You may even be
duplicating holdings in say your mutual funds and not even be
aware of it. Well, it just may be time for spring cleaning. Take
a fresh look and see if you can still justify why you still own
a particular investment. Make sure it is consistent with meet-
ing your current objectives. Remember, if you can consolidate
your holdings wherever possible this will make things easier to
measure, manage, and control. Just be careful not to put all of
your eggs....
- Don’t PUt All oF YoUR (MARket RIsk) eggs In one
BAsket Unless YoU WAnt to MAke oMelettes
I purposely differentiate market risk investments from invest-
ments that simply grow with guaranteed interest.
With investments that have market fluctuation of their values,
proper diversification can help to reduce the volatility, or risk.
This is critical in controlling your risk of loss in investments
such as stocks and bonds. That’s one reason why mutual funds
are very popular. They provide a diversified way of owning
stocks and bonds, all in one neatly-packaged investment.
Although credit risk is also an issue, it can be more readily
controlled by only investing in credit-worthy companies, or
by understanding the regulations and insurance protection that
may be in place to protect against defaults. For example, only
investing in banks up to the FDIC insurance limits would be an
example of controlling your credit risk.
My illustration above where Jack put all of his eggs into real
estate is an example of not diversifying prudently, and in turn
ending up with egg on his face.
- FAIlIng to PlAn FoR the PossIBIlItY oF
CAtAstRoPhIC Illness, Is PlAnnIng to FAIl
No matter whose statistics you believe, whether it be AARP,
or the Department of the Aging; they all will tell you that if
you live long enough you have a greater than 50% chance of
