The 2009 World Wealth Report from Capgemini and Merrill Lynch, a survey of high net wealth backers around the globe that have US$1 million of net finance wealth excluding their primary residence, outlines where these folk invest their cash.
Normally the 10,000,000 folk worldwide that fit this definition of having 'high net wealth', have 29% of their capital invested in shares, 31% in bonds, 17% in readies, 18% in property and 6% in options like hedge funds, commodities and personal equity. If the planet's wealthiest folks take such a diversified approach maybe the rest of us should also consider it.
Diversification also is applicable to share portfolios. Own a selection of corporations, but do not over-diversify, or as Peter Lynch the great Fidelity fund boss, calls it de-worse-ification. Having mentioned that Lynch used to hold over 700 corporations in his fund, but endorses private backers hold maybe 20-40 firms.
Emphasizing fine quality shares is a tactic that continues to appear sensible. It is extremely common to see folks new to shares to head directly for the hopeful end of the market to buy tiny corporations or shares trading at a couple of pennies.
While not quite as exotic as this, high-quality corporations, like bigger, blue chip firms that have experienced management and have a track record of delivering growing profits and dividends, do have a tendency to outperform long shots.
When times are good and the market is rising, quality does have a tendency to lag, but when the unavoidable troublesome times roll around, quality shines and long shots can regularly fall into deep black holes.
Selling is something stockholders should be prepared to do, but only reluctantly. Warren Buffett has previously expounded his preferred holding period for shares is for evermore. What this actually means is that long term backers should sit thru times of short term share price weakness or volatility if they are ok with the essential essentials of the business they own.
However, this doesn't suggest share speculators can ignore bad news. If a company seems to be facing hard long term issues, be ready to sell.
Include some smaller corporations. While blue chips should make up the core of a share portfolio, leave a little bit of room for some fascinating tiny corporations. Though higher-risk, they offer more expansion potential. It can be sensible to go looking for smaller corporations which have the features of blue chips in each way aside from size.
Buy integrity. As respected US investor Philip Fisher has expounded "there are too many decisions out there to trouble with firms that are not run by honest, tenacious folks".
Normally the 10,000,000 folk worldwide that fit this definition of having 'high net wealth', have 29% of their capital invested in shares, 31% in bonds, 17% in readies, 18% in property and 6% in options like hedge funds, commodities and personal equity. If the planet's wealthiest folks take such a diversified approach maybe the rest of us should also consider it.
Diversification also is applicable to share portfolios. Own a selection of corporations, but do not over-diversify, or as Peter Lynch the great Fidelity fund boss, calls it de-worse-ification. Having mentioned that Lynch used to hold over 700 corporations in his fund, but endorses private backers hold maybe 20-40 firms.
Emphasizing fine quality shares is a tactic that continues to appear sensible. It is extremely common to see folks new to shares to head directly for the hopeful end of the market to buy tiny corporations or shares trading at a couple of pennies.
While not quite as exotic as this, high-quality corporations, like bigger, blue chip firms that have experienced management and have a track record of delivering growing profits and dividends, do have a tendency to outperform long shots.
When times are good and the market is rising, quality does have a tendency to lag, but when the unavoidable troublesome times roll around, quality shines and long shots can regularly fall into deep black holes.
Selling is something stockholders should be prepared to do, but only reluctantly. Warren Buffett has previously expounded his preferred holding period for shares is for evermore. What this actually means is that long term backers should sit thru times of short term share price weakness or volatility if they are ok with the essential essentials of the business they own.
However, this doesn't suggest share speculators can ignore bad news. If a company seems to be facing hard long term issues, be ready to sell.
Include some smaller corporations. While blue chips should make up the core of a share portfolio, leave a little bit of room for some fascinating tiny corporations. Though higher-risk, they offer more expansion potential. It can be sensible to go looking for smaller corporations which have the features of blue chips in each way aside from size.
Buy integrity. As respected US investor Philip Fisher has expounded "there are too many decisions out there to trouble with firms that are not run by honest, tenacious folks".
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