Financial Terms You Thought You Understood: Diversification

Diversification is a word thrown around a lot in the financial world and is often misunderstood. We find that many investors claim to be diversified, but upon closer inspection, lack true diversity in their portfolios. It's not just about stocks and bonds; there's a whole world of asset classes and investment tools that might not even be on their radar.

In this episode, we discuss what being truly diversified looks like and highlight the dangers of not knowing how to turn savings into sufficient income in retirement. At the end of the episode, we answer some listener questions about whether to sell a home and rent while home values are high and what stocks are “hot” right now.


Here’s some of what we discuss in this episode:

• Why the term diversification is commonly misunderstood + why diversification is so important
• How are you going to generate income during retirement?
• Listener question: We’re retiring in 2 years and plan to move to the beach. Home values in our neighborhood are sky high right now. Should we sell now and rent for a few years?
• Listener question: What do you see as the "hot" stocks right now?

Key Takeaway

“If you left the house, and all you did is wear socks, you might get arrested. So, if you've got green socks, and blue socks, and brown socks, your socks are diversified, but really, you need more in your wardrobe than just socks.”

We can assist you on your journey to financial freedom:
https://www.askfreedomfinancial.com/
205.988.0006

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