Diversify

The best way to avoid severely affected by a stock market crash or another Enron / Worldcom fiasco is to ensure that you do not put all your eggs in one basket. Diversification helps to ensure steady growth of your net worth as you accumulate more power.

This idea is not limited to the stocks in your portfolio, but should include all of the components that are part of your net worth. For example, it is OK to take $ 5,000 and put it in a stock you want, as long as you have enough equity in other areas, such as home or property value, mutual funds, savings, etc. ..
However, if you are still in the early stages of building wealth, and you only have $ 500 in savings, and you rent an apartment and lease your car, you probably do not want to put in a stock. To $ 5,000 A good guideline is to keep from having more than 20% of your net worth in a particular asset, unless it is your home.

Here is a good example of a diversified portfolio wealthy for someone in their 30's:

Payment: $ 2,000

Emergency savings: $ 5,000

Regular savings: $ 3,000

CDs or T-Bills: $ 5,000

Growth stocks: $ 5,000

Net value of vehicles: $ 7,500

401 (k) plan: $ 15,000

Equity in house: $ 20,000

Other tangible net assets: $ 10,000

Of course, the amounts more or less, depending on your age and situation in life.

Also, do not forget to protect a number of long-term disability and / or life insurance, even when you're young. Your net worth Following these simple guidelines will hopefully help to achieve a decent age. Your retirement goals

Scott is in his mid-thirties and has a Bachelor's Degree in Accounting, with a minor in Decision Science. He entered the accounting field ten years ago when he started working for a software company, where he stayed for seven years. He is now the Inventory Control Manager for a large winery, and maintains his own blog on financial