GOBankingRates works with many financial advertisers to showcase their products and services to our audiences.
These brands compensate us to advertise their products in ads across our site.
This compensation may impact how and where products appear on this site.
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information.
you’re free to read more about oureditorial guidelinesand our products and servicesreview methodology.
Ina podcast episode, Orman gaveimportant investing advicethat she believes all her listeners should follow.
That advice is to diversify.
Instead, she said its better toown multiple types of assets, and Orman has a point.
The client had no other investments and didnt listen to Ormans advice to diversify.
Sadly, that client lost all three homes due to a significant weather event.
This story is a poignant reminder of why its important to diversify your investments.
All investments, whether its houses, stocks, orcryptocurrency, have risk.
And many events can impact theperformance of investments, from natural disasters to elections.
The Modern Portfolio Theory (MPT)
Orman isnt the only financial expert who supports diversifying assets.
Its actually a part of a Nobel-Prize winning theory called Modern Portfolio Theory (MPT).
Additionally, your real estate could retain value, even in a downstock market.
The idea is that if you have enough variation, the strength of your portfolio can counteract the risks.
Common financial goals include buying a house, saving for kids college educations, and retirement.
When youre ready to invest toward your goals, spread out your investments across asset classes.
Even if you spread out your investments, its also important to diversify within each asset class.
So, instead of buying one stock, consider purchasing stocks across multiple industries.
That story is a cautionary tale against having all your investments in one category.
More From GOBankingRates
Share This Article:
