Go Big with Gib Podcast
Go Big with Gib is a podcast for professionals, business owners and entrepreneurs to talk about their big wins.
Go Big with Gib Podcast
Ep 77. Achieving True Diversification in Your Investment Portfolio
True diversification means spreading investments across assets that don't move in sync, not just dividing money between stocks, bonds, and mutual funds. We explore how incorporating real estate and cryptocurrency creates a more resilient portfolio that can weather different market conditions.
• Traditional paper assets often move together during market downturns, providing limited protection
• Real estate offers consistent cash flow, inflation protection, and tangible value
• Passive real estate investments through syndications and funds make this asset class more accessible
• Cryptocurrency provides explosive growth potential and isn't correlated with traditional markets
• Michael Saylor predicts one Bitcoin could be worth $13 million by 2045
• Recommended portfolio allocation: max 25% in stocks, 25-40% in real estate, at least 25% in crypto
• Focus on established cryptocurrencies like Bitcoin and Ethereum for less volatility
• Balance is key – diversification is about investments that behave differently in various market scenarios
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Welcome to the Go Big With Gibb podcast, where we talk to professionals, business owners and entrepreneurs about their big wins. 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. 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. Now, you've probably heard the term diversification thrown around a lot, but what does it really mean? Diversification is all about spreading your investments across different asset classes to reduce risk. The idea is simple If one investment performs poorly, others might perform well, balancing out your overall portfolio. But here's the thing Many people think that just investing in stocks, bonds and mutual funds is enough for diversification.
Speaker 1:While these assets are important, they're all paper assets and they often move in the same direction, especially during market downturns. So is that really true diversification? I don't think so. True diversification means including assets that don't always move in sync with the stock market. That's where real estate and cryptocurrency come in. These alternative investments can provide stability, growth and protection against inflation, things that traditional paper assets struggle to deliver.
Speaker 1:Let's start with real estate. 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. Unlike stocks and bonds, real estate is a tangible asset you can see it, touch it and it's not going anywhere. Now I know what you're thinking, but, gibb, real estate is expensive and it requires a lot of work. And you're right. 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. This makes it accessible to everyday investors looking to diversify their portfolios.
Speaker 1:Next up, let's talk about cryptocurrency. Now, I know crypto can be a bit polarizing, but hear me out. Cryptocurrencies like Bitcoin and Ethereum have shown explosive growth potential. They're not correlated with traditional markets, which means they can provide diversification benefits. Plus, they're part of a rapidly evolving asset class that's reshaping the financial landscape. And let's not forget Michael Saylor, the chairman of MicroStrategy, predicts that one Bitcoin could be worth $13 million by 2045. That's a staggering number, but it illustrates the kind of growth potential that we're talking about. Of course, with high potential, returns come high risk. So it's important to approach crypto with caution and only invest what you can afford to lose.
Speaker 1:By allocating a portion of your portfolio to crypto, you can add that extra layer of diversification. 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. So what is a good allocation? Well, I recommend keeping no more than 25% of your net worth in the stock market. That might sound low, but remember, stocks can be volatile and we want stability too. For real estate, I aim to 25% to 40% of my portfolio. This could be through direct ownership, real estate syndications or funds or other passive investment vehicles. Real estate provides that steady income and inflation protection. For crypto, I recommend at least 25%. The remaining portion can include life insurance, bonds and other assets, based on your risk tolerance. This allocation aims to provide stability and growth, leveraging the unique strengths of each asset class. Now, I'm not saying you should go and dump all your stocks and go all in on real estate or crypto. Balance is key. But by including these alternative assets, you're creating a more resilient portfolio that can weather market conditions.
Speaker 1:Diversification isn't just about having different investments. It's about having investments that behave differently under various market scenarios. That's how you achieve true diversification. 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. 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. Thanks for tuning in and remember always do your own research and consult with a financial advisor or friend before making any investment decisions. Until next time, keep investing smart. Thank you for listening to this episode of Go Big with Gibb. If you haven't already, go follow us on social media at Gibb Irons. We'll see you next time.