Global Financial Crisis II? Diversify, Diversify, Diversify

For centuries, many investors have slept comfortably in the knowledge that if they diversify their assets wisely among stocks, bonds, commodities and cash, they will do well enough over the long term. But is this a universal principle, or a man-made strategy?

The recent boom and bust of the global economy over the last decade, from which many portfolios are still creeping up, not only left investors questioning their strategy for risk, but helped shine the spotlight on the importance of diversifying.

A little known statement tucked away in a little known part of scripture unveils that this is indeed a universal strategy for long-term investing. "Divide your portion to seven, or even eight, for you do not know what misfortune may occur on the earth." says Eccl 11:2.

Have you heard of stories about people earning millions and you thought they had it all made, when suddenly they are declared bankrupt? And you wonder to yourself "what happen?". A typical mistake is to dump all your money into an investment and then when it sours up, you lose everything. Failure to diversify.

There are those who mock diversification and almost treating this concept with contempt. But what does the Bible say? Ecclesiates 11:2. Diversify.

Diversification by assets can be in the form of stocks, real estate, bonds, cash, and even precious metal like gold and silver. However, diversification does not mean you jump into it blindly. Do your research first.

Diversifiation by investment styles can be in the form of value-driven investment, market orientated investment, and small capitalization investment.

Real estate represents an investment that can benefit from geographical diversification. International investments comprise another asset class that could and should be invested geographically. Emerging markets may offer excellent growth potential.

Today's Bottom Line

Whatever your investment, remember to diversify. That because calamities and misfortunes can occur on the earth anytime.

The Bible does show many ways to overcome any financial crisis. Many of these principles are laid out in our successful course, the Scriptural Financial Freedom series. To learn more, you can download the Small Groups kit from our estore.

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