Latest / Go Big with Gib Podcast / Ep 77. Achieving True Diversification in Your Investment Portfolio

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Ep 77. Achieving True Diversification in Your Investment Portfolio · Go Big with Gib Podcast

• 0:00
  Speaker 1: Welcome to the Go Big With Gibb podcast, where we talk to professionals, business owners and entrepreneurs about their big wins.
• 0:06
  Speaker 1: Hey there, fellow investors, and welcome back to this episode of Go Big With Gibb, where we dive deep into the world of investments to help you grow your wealth.
• 0:17
  Speaker 1: I'm your host, gibb Irons, and today we're tackling a topic that's crucial for every investor achieving true diversification in your investment portfolio.
• 0:26
  Speaker 1: Now, you've probably heard the term diversification thrown around a lot, but what does it really mean?
• 0:31
  Speaker 1: Diversification is all about spreading your investments across different asset classes to reduce risk.
• 0:37
  Speaker 1: The idea is simple If one investment performs poorly, others might perform well, balancing out your overall portfolio.
• 0:44
  Speaker 1: But here's the thing Many people think that just investing in stocks, bonds and mutual funds is enough for diversification.
• 0:51
  Speaker 1: While these assets are important, they're all paper assets and they often move in the same direction, especially during market downturns.
• 0:58
  Speaker 1: So is that really true diversification?
• 1:01
  Speaker 1: I don't think so.
• 1:02
  Speaker 1: True diversification means including assets that don't always move in sync with the stock market.
• 1:08
  Speaker 1: That's where real estate and cryptocurrency come in.
• 1:11
  Speaker 1: These alternative investments can provide stability, growth and protection against inflation, things that traditional paper assets struggle to deliver.
• 1:20
  Speaker 1: Let's start with real estate.
• 1:21
  Speaker 1: Real estate has long been a cornerstone of wealth building for a reason it provides consistent cash flow through rental income and it's a great hedge against inflation, because property values tend to rise over time.
• 1:34
  Speaker 1: Unlike stocks and bonds, real estate is a tangible asset you can see it, touch it and it's not going anywhere.
• 1:40
  Speaker 1: Now I know what you're thinking, but, gibb, real estate is expensive and it requires a lot of work.
• 1:46
  Speaker 1: And you're right.
• 1:46
  Speaker 1: Buying and managing physical properties can be a hassle, but there are ways to passively invest in real estate through real estate syndications and funds that allow you to invest in real estate without the headaches of property management.
• 1:59
  Speaker 1: This makes it accessible to everyday investors looking to diversify their portfolios.
• 2:03
  Speaker 1: Next up, let's talk about cryptocurrency.
• 2:06
  Speaker 1: Now, I know crypto can be a bit polarizing, but hear me out.
• 2:09
  Speaker 1: Cryptocurrencies like Bitcoin and Ethereum have shown explosive growth potential.
• 2:14
  Speaker 1: They're not correlated with traditional markets, which means they can provide diversification benefits.
• 2:19
  Speaker 1: Plus, they're part of a rapidly evolving asset class that's reshaping the financial landscape.
• 2:24
  Speaker 1: And let's not forget Michael Saylor, the chairman of MicroStrategy, predicts that one Bitcoin could be worth $13 million by 2045.
• 2:33
  Speaker 1: That's a staggering number, but it illustrates the kind of growth potential that we're talking about.
• 2:38
  Speaker 1: Of course, with high potential, returns come high risk.
• 2:41
  Speaker 1: So it's important to approach crypto with caution and only invest what you can afford to lose.
• 2:46
  Speaker 1: By allocating a portion of your portfolio to crypto, you can add that extra layer of diversification.
• 2:52
  Speaker 1: Focus on large-cap cryptocurrencies like Bitcoin and Ethereum, as they're more established and have larger market caps, which generally means that they're less volatile than smaller altcoins.
• 3:03
  Speaker 1: So what is a good allocation?
• 3:05
  Speaker 1: Well, I recommend keeping no more than 25% of your net worth in the stock market.
• 3:09
  Speaker 1: That might sound low, but remember, stocks can be volatile and we want stability too.
• 3:15
  Speaker 1: For real estate, I aim to 25% to 40% of my portfolio.
• 3:20
  Speaker 1: This could be through direct ownership, real estate syndications or funds or other passive investment vehicles.
• 3:26
  Speaker 1: Real estate provides that steady income and inflation protection.
• 3:30
  Speaker 1: For crypto, I recommend at least 25%.
• 3:33
  Speaker 1: The remaining portion can include life insurance, bonds and other assets, based on your risk tolerance.
• 3:39
  Speaker 1: This allocation aims to provide stability and growth, leveraging the unique strengths of each asset class.
• 3:45
  Speaker 1: Now, I'm not saying you should go and dump all your stocks and go all in on real estate or crypto.
• 3:50
  Speaker 1: Balance is key.
• 3:51
  Speaker 1: But by including these alternative assets, you're creating a more resilient portfolio that can weather market conditions.
• 3:58
  Speaker 1: Diversification isn't just about having different investments.
• 4:02
  Speaker 1: It's about having investments that behave differently under various market scenarios.
• 4:06
  Speaker 1: That's how you achieve true diversification.
• 4:09
  Speaker 1: As someone who's been diving into crypto myself, I can tell you it's been a wild ride, but one worth taking if you're serious about growing your wealth.
• 4:17
  Speaker 1: My own journey started about two months ago and I've seen some incredible results thanks to the guidance of our amazing crypto community on X.
• 4:25
  Speaker 1: Thanks for tuning in and remember always do your own research and consult with a financial advisor or friend before making any investment decisions.
• 4:33
  Speaker 1: Until next time, keep investing smart.
• 4:35
  Speaker 1: Thank you for listening to this episode of Go Big with Gibb.
• 4:42
  Speaker 1: If you haven't already, go follow us on social media at Gibb Irons.
• 4:46
  Speaker 1: We'll see you next time.