Diversification

Kia Ora,

For most people in the world their investing begins & stops in the stop market in the form of mutual funds.

The advice is these offer the best protection by diversifying your portfolio.

Or not putting all your eggs in one basket.

Some call that deworsification or you are making your situation worse by not financially educating yourself.

Warren Buffet basically says that diversification is for those that do not understand or can't be bothered learning or words to that effect.

Why the last few blogs have being about stocks is because when you play the game Cashflow many people get carried away with the fact that stocks get you  the money to buy the properties with passive income.

Now that is important, but it means they miss the point of buying cash flow positive assets. their main focus is on the stocks. To get out of the rat race they rely soley on that stock going up.

When they go looking in real life they  don't find that special stock but invest in a mutual fund because of diversification as it spreads your risk.

The rich on the other hand focus on one area until successful then look at the next. In fact the word focus can be broken down into the following Follow One Course Until Successful.

You can succeed in Mutual funds but despite their claims most Mutual funds do not do well year in or year out. What they do do is provide the broker with a sure income through fees whether the year was good or bad.

If you really want to see how the average Mutual fund does then look at monkeydex.com where the monkey consistantly outperforms mutal funds.

Still if you do the study then Mutual funds might be the way for you.

Personally I have my strategies & they don't include mutual funds especially something like the Kiwisaver here in NZ, my tribal scheme of Whai Rawa or a 401k in the US.