Is Diversification the Way to Go?
I am not a financial adviser but I did have investments that I saw vanishing before my very eyes, and it concerned me greatly. As a person with very little investment experience, I felt the need to search for satisfactory answers.
I always find it interesting that when you diligently look for something, the answer invariably appears, and so it was with my search. I was led to a book written by Robert T. Kiyosaki called Rich Dad’s Prophecy. I had read Rich Dad Poor Dad a few times, but that was the only Robert Kiyosaki book I had ever read. I immediately purchased a copy and what I learned was one of the biggest eye openers I have ever experienced.
We are all aware of the cyclical nature of the stock market. We expect it to go up, down and sideways. However, in the long term we always expect to see a gradual incline. Normally, if we were to look at a graph covering many years, we would see an upward motion. We are seeing quite a different picture these days and it is a rather frightening situation.
A major part of the problem is that by the year 2016, the first of the 75 million baby boomers in the U.S. will be turning 70. A large percentage of these people have money stashed away in a 401k plan. When these baby boomers reach age 70 1/2, they will be obligated under law to remove all their money out of their 401k plan. They are going to have to liquidate their assets. Just think about that for a moment!
Literally millions of people are going to be selling off their mutual funds and stocks, because the Government tell them they have to. It’s so very simple….when there are more sellers than buyers, then the market goes down. When these baby boomers sell off their mutual funds and stocks, there are not going to be that many younger people buying, to balance the sales with purchases. This is a disaster waiting to happen. I suppose the Government could step in with an amendment to the law, allowing people to keep their money in their 401k longer, but then the Government would not get their tax dollars until much later.
Most people already know that they are in deep financial trouble, but they don’t realize the full impact. They are still being told that as long as they diversify, they will be fine. They are being told to sit tight and ride out the storm! I believe we are wise to listen to Warren Buffet when he states…. “Diversification is a protection against ignorance. It makes very little sense for those that know what they are doing”.
It’s not too late to get a handle on your finances and make some intelligent decisions. Seek out the education you need to fully understand your financial position and take action now, to secure additional funds to see you through your retirement. The experts tell us that a home-based business is one of the wisest choices a person could make, especially during this economic climate. It is well known that fortunes can be made during such a time. There are many great opportunities out there. Go and find yours and take action.
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