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Make sure you've packed your “retirement parachute” before it's too late

by , 18 March 2016

Every day I meet new people who continuously worry about the markets trampling on their investments. People feel anxious that investing won't give them enough to survive.

You see, retirement plays on most people's minds. And in today's times, the sad thing is, a retirement annuity isn't enough to retire comfortably and support your family.

What it really comes down to is answering these two simple questions…

If all hits the fan and the market goes on a downturn or worse, does your portfolio have enough protection? And, is it able to continuously build steady wealth?

Most people can't give a confident straight answer of “yes”. And this is a big problem.

But relax, because you can kick this problem to the curb. All you need to do is pack your own “retirement parachute”.

You must be thinking what does this mean?

Well, keep reading to find out how exactly to pack the right retirement parachute. It's not only going to protect what you have, but also grow your wealth to build a comfortable nest-egg.

This idea is 100 times more important than any stock pick

The classic way to protect against market fluctuations is by diversifying your investments.

With diversification you don’t just invest in a single type of investments. You’re spreading your bets out, so if one investment falls, others may hold steady or even go up.

The fact is, diversification is 100 times more important than any stock pick. It’s 100 times more important than knowing the next hot country to invest in, or knowing what the housing market is doing... or even whether the economy is booming or busting.

You see, I’m a big believer of diversifying investments. There may be costs to it, but if you can’t be 100% sure of the market, you’re putting yourself and your portfolio at risk to becoming poorer.

The sad thing is, investors have no idea of how to diversify sensibly. So they end up taking huge risks by sticking big chunks of their portfolios into just one or two investments.

In fact, having a portfolio of just bonds and stocks over the past 20 years hasn’t been effective at all. In a world with constant volatility, this kind of diversification isn’t enough.

You see, bonds and stocks often move in opposite directions. When investors expect the economy to weaken and companies’ profits to drop, stock prices will likely fall.

When this happens, central banks may cut interest rates to reduce borrowing costs and stimulate spending. This causes bond prices to rise. If your portfolio includes both stocks and bonds, the increase in the value of bonds may offset the decrease in the value of stocks.

This is why diversifying your wealth in multiple classes is the best action to take to protect what you already have, as well as grow your investments.
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Let me show you what I mean…

A 1977 study by academics Edwin J Elton and Martin J Gruber showed how even a little bit of diversification could cut your risk.

It found that the average standard deviation of a US share over a year was 49.3%. And, what this basically means is that roughly a third of the time, you could expect the average US share to be 50% higher or 50% lower than the point at which you bought it.

It sounds great if you’re up 50%, but not so great if you’re down that much.

But if you bought another share, the standard deviation of the portfolio would fall to 37.4%.

Having ten shares would cut this to 24% and so forth. Diversifying across asset classes would cut down the risks of losing even more.

That’s why, over the next weeks I’m going to show you five great ways to earn a second income, boost your wealth and secure your future retirement…

But for now here’s your first one…

You can make an easy second income by starting a small business
The easiest way to bank a second income for your retirement.

Creating multiple streams of income is the best way to earn a passive income. Having this is the ultimate assurance that you’ll always be wealthy.

And, it isn’t hard. Starting a small business and doing it right will, over time, grow into something that can keep putting cash in your pocket.

But the best part about creating multiple streams of income is that you don’t have to work twice as hard to get a pay check. You’re actually working less, but still getting cash in your pocket.

Take Aiden Sookdin, Editorial Director of FSPInvest for example…

He makes plenty of cash from running multiple businesses. Most of the time, he’s making this kind of income sitting at his desk. I remember his successful business – selling biltong to a company full of hungry employees (and even the boss).

But you see, it’s easy money, for doing hardly any work. This is why passive income like this is vital to boosting your wealth and protecting your retirement.

Just recently, Aiden hosted his Biz-op Bootcamp for a room full of motivated people wanting to earn a second income and change their lives for the better.

If you missed out on this event, don’t worry because he’s in the process of creating a DVD with his presentation on. I encourage you to see how you can use this information to create multiple streams of income for yourself…

Knowledge brings you wealth

Joshua Benton
Managing Editor, MoneyMorning

Make sure you've packed your “retirement parachute” before it's too late
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