One of the first special presentations that I created was my Investment Pyramid. I created a guide to the variety of investments, using the motif of building a pyramid from the ground up to the clouds in the sky. If you want to build your own pyramid, here are the steps to follow:
1) Build a Solid Foundation – The first step to building any structure is to set down a solid, secure foundation. In the financial world, this means spending less than you earn, eliminating any high-interest debt, and setting up an emergency fund. That way, if your investments don’t do as well as you hope, you will still be in good shape, financially.
2) Creating a Broad Base – If you’re going to create a diverse portfolio, you need to get diverse investments to put in it. The best and easiest way to do this is using mutual funds, which are designed for exactly this goal. Here, I cover several types of mutual funds, as well as give out a simple method to create a diverse portfolio.
3) Adding Concentrated Investments – Continuing up our pyramid, the next step would be to look into individual stocks, if you so desire. There’s more risk, but also more possibilities in such investments. A good use for them is a supplement to your mutual funds, if you want to experiment with individual stocks at all.
4) Considering Speculation – A look into the always fun world of ways to speculate with your money. Considering futures, options, and currency trading, with strong warnings about the risk of such investments. Speculation is not for everyone, and has the possibility of great losses if done wrong.
5) Keeping an Eye on your Hopes and Goals – It’s easy to forget, as we create our asset allocations and research investment opportunities, that the greater purpose is to finance our goals and dreams. The best reason to invest is to achieve your hopes in life. Knowing your goals will determine how you should invest (if investing is even the best way to meet your goals). If you know that, the battle is half over.
And there you go, five easy steps to building an investment pyramid of your very own.
