|
|
Helping You Grow Wealth With A Purpose Contact Us Today: 866-594-9919 |
|
Far too many people try to take investment matters into their own hands and suffer from ―poor performance-itis – a deadly wealth killing disease. This often happens from making one or several of these common mistakes:
1. Having too many portfolio holdings. Many people simply believe there is strength in numbers. You hear all the time, ―Don’t put all your eggs in one basket.While it is true you should diversify, you should be on the guard against “di-worse-ification” – having too many positions.
A portfolio can be diversified having as few as ten holdings. Anything north of 50 positions can simply be too many to keep track of.
I once met a Harvard MBA who was a successful CFO for a fish company. He claimed to have ―all the answers‖ when it came to investing. When I looked at his portfolio, no lie, he owned over 250 different stocks. I asked him how he kept track of all these and his answer was simply "I don’t…" If a Harvard MBA can make this mistake, everyone else could as well.
Internet headlines inform you that gold settled at another record close today. Nightly news segments show you footage of excited sellers and beaming commodities traders. Radio commercials remind you that gold has outperformed stocks in the last decade. How should you respond to all this?
There’s no doubt that in recent history, the performance of gold is startling. Across the 2000s, gold gained 278.52% on the COMEX while the S&P 500 lost 24.10%. In 2010, the S&P 500 advanced 12.78% and gold notched a 29.76% gain.
So given these numbers, why doesn’t everyone put every dollar they have into gold?
Recent price returns don’t tell the whole story. Investing big in gold may seem like a no-brainer – until you take history and inflation into account. In 1980, gold prices were up around $850 an ounce – adjusted for inflation, that’s the equivalent of about $2,300 an ounce today. Yet when 2008 ended, gold prices were at just $870 an ounce. When 2003 started, gold futures were trading at $343 per ounce.
Gold is often seen as a hedge against inflation – but from 1980-2002, annualized inflation averaged 3.55% and gold didn’t exactly keep pace. So if you lengthen the window of historical performance, gold hasn’t always trumped stocks.
New Portfolio for Income Investors
This month we added a new portfolio
for subscribers at FaithBasedInvestor.com. We responded to requests for an “income solution” in this low interest environment! Most investors were stuck with parking their money in cash (at less than 1% interest), taking huge risks in the bond market (with rates rising), or look for some other alternative. That’s where we have been finding additional yield and some good growth potential. After all, what good is income if you can’t grow it to keep up with inflation?
For the first time EVER, we revealed our income portfolio secrets in our May 2011 issue. On Page 9 you could find our all-new Global Income Portfolio (GIP). This is a portfolio strategy for our retired investors looking to generate more income. This portfolio consists of stable high-yielding investments designed to generate growing income! This request came from many of our members who are fifty or older and looking for more stable income producing investments. We use the same stringent moral and financial criteria to find our top ranked high dividend investments!
|
|
