3D image of stock prices along the side of a building with the word 'Diversify' shown

The Value of Diversity

Diversity is crucial in so many aspects of life: things are often improved when variety comes into the picture—backgrounds, perspectives, opinions, even diets. The same is true for investments. And if you’ve talked to an advisor before, you’ve probably heard about the importance of diversifying your holdings. But what does that actually mean? 

Those focused on buying and selling stocks may say it’s about having both value stocks and growth stocks in your portfolio. They may also counsel you on the merits of diversifying across market sectors—tech, financial, energy stocks, and more. Bond marketers may recommend that you acquire a diversity of bond types: government, corporate, mortgage-backed, and municipal. Those who earn a living selling structured products and annuities may encourage you to buy several kinds of their products—which certainly sweetens the deal for them, since they typically work on commission. But apart from the interests of professionals looking first and foremost to make a bigger profit, what’s real diversification? It’s about acquiring a mix of holdings that makes sense for your particular situation.

What does that look like? It’s often about having a properly allocated combination of large-, mid-, and small-cap domestic and foreign equities for long-term growth; bonds for potential income; and liquid assets—such as money markets, cash, and short-term treasuries—to meet more immediate expenses and income needs. With that kind of diversity, your money has the opportunity to grow, while remaining protected from significant shifts in the market. And as a result, when you need it—whether to cover the cost of a big expense, like a child’s college tuition or a new home; to fund your retirement; or to leave behind a legacy you can be proud of—it’s there. 

The key, though, is that your diverse portfolio is specifically tailored to fit your needs. Optimizing your investments can’t happen with a one-size-fits-all approach. There’s no way that, say, the standard balanced funds strategy (60 percent equities/40 percent bonds), can account for what exactly you need, when and how you need it. That’s why an experienced advisor who is actively managing your portfolio allocation can be invaluable. For more information on my approach, visit debrabrede.com.

Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.

Pay It Forward! The Retirement Benefits of Philanthropy

There are many advantages to a financially secure retirement. You can do what you want, when you want: moving closer to your grandkids, visiting exotic locations you’ve only dreamed about, and more. And you can also give back, making an impact on the causes that matter most to you. Giving back creates the kind of purpose people often find themselves missing in retirement, and for many of us, that sense of purpose isn’t optional; it’s essential.

Maybe you’ve always had a purpose—something as clear and true and tangible as your own pulse thrumming beneath your fingers. Or maybe, without the things you’ve been dedicated to for so long—a job, your kids, a spouse—you need a little help finding what moves you. If so, you’re not alone. And fortunately, identifying where your passions lie is as easy as asking yourself a few simple questions: 

What breaks your heart when you see it? Is it people living on the street, orphans, starving or sick children, abused women, abandoned animals, polluted beaches? When you identify the issues that create that familiar ache in your chest, you can start to do something to address them.

 What makes you feel good? Of course, there’s more than one way to go about making a difference. What feels good to you? Do you find power in writing a big check, or would you rather spend an afternoon reading to a child, building a house for a homeless family, or enjoying a meal with an elderly neighbor? Asking this question and considering your answers can give you direction as to where to invest your time and energy. 

What would make the biggest difference? Think about how you can make an impact. What does the cause, organization, or individual you’re looking to help actually need? Is it money for new equipment to outfit a health clinic, individuals to help tutor children in an afterschool program, or perhaps your expertise—entrepreneurial insights or accounting knowledge, for example, that can help an organization meet operational goals or better fulfill its own purpose? With this in mind, consider how you can provide support in a manner that will be satisfying to you, and useful for them. When it comes to service, that’s the sweet spot. 

Set some time aside to really think about these questions. Once you do, you’ll be well on your way to homing in on your purpose and making the world a better place, which is a priceless gift for everyone involved. For more on achieving a purpose-driven retirement, click here and check out my book, You’re Retired… Now What?