While investing is the way to grow and sustain wealth, many people are still afraid to invest because they think they’ll be setting themselves up to lose all their money. Losing all your money with investing is almost next to impossible. Though investing is not without its risk, the truth is if you are smart about your money you are more likely to become wealthier and not poorer. Smart investors know that it’s a good idea to spread their money around. Think of it like dividing all your eggs into multiple baskets. When you diversify, you’re not putting all your money in one place – you’re spreading it out to different places.
Why is this a good thing? Well, if one industry isn’t doing well or even crashes, it won’t hurt your whole stash of money. It’s like having a backup plan. But let’s take it a step further, instead of just investing in your own country, you might want to consider investing in other countries as well. Diversification doesn’t just mean putting your money in different asset classes where you live.
One way you can spread out your money for more exposure and less risk is by getting some international stocks. These are like little pieces of companies from different countries. You can also get bonds from other countries, which are kind of like loans you give to foreign governments or companies.
There are also real things like land and gold that you can invest in. For example, you can buy a tiny piece of a bunch of different properties around the world through something called Real Estate Investment Trusts (REITs). And if you’re into things like gold and oil, those can be good to have in your mix too.
If you want to keep things super simple, there are things called index funds and ETFs. These are like buying a little bit of everything in a certain group of things, like stocks or bonds from all over the world. It’s like getting a variety pack.
But, there’s a catch. When you’re putting your money in different countries, you need to think about the money itself – different countries have different currencies. Changes in the value of money can affect how much your investments are worth.
In the end, the idea is to be smart about where you put your money. By spreading it out globally, you can have a better chance of making money in the long run while being careful about risks. It’s like playing the investing game wisely and increasing your chances of success.