by Katarzyna Radzka

Created on: September 22, 2009

'Don't keep all your eggs in one basket' is a popular saying, and it doesn't hold more truth than when it comes to investing your money. Investing is serious business and should be spread out over a number of areas in order to reap the best profits when the market is going up and to minimise losses when the market is going down.

Without the right information it may seem difficult and scary to diversify your investment portfolio. If you've always invested in property, throwing your money at shares or managed funds, or a small business may seem like a risky move. However, with the right preparation, research and planning it may be an ideal move in order to increase your investment return.

In today's economy there are numerous avenues to choose when it comes to investing your money, from most it's possible to reap profits in the long term, experience losses in the short or lose all your money. Hence, the need for financial planners and investment advisers. If you're uncertain about your next investment move, it's best to make an appointment and have a chat with one of them.

1 - Shares are a popular form of investment. Thousands of companies have gone public and given everyday folks the chance to become stockholders in them. Like with anything else, there is no guarantee that you will make an obscene amount of money, nor is there a guarantee that you will lose money. In order to make money on the share market you have to either be able to trade well, or stick to it for the long term. Investing in shares is a long term investment which can make you a lot of money for retirement, but with a little risk added in. The higher the risk, the more money can be made, at the same time the more risk, the easier it is to lose.

2 - Property prices double every ten or so years in major cities, at least that's what many people have been led to believe. Property is another long term investment that can be used as capital or cash flow, or both. When you own a property and rent it out, the rent paid is your cash flow. If you own the property outright, that's your income. Have a mortgage, than the rent from the property will pay for some or all of it. The value of the property still goes up. The more equity you have, what you owe minus what you own, the more money you have to invest in more properties.

3 - Business is another area where it's possible to diversify your investments. Owning a small business can provide you with regular cash flow, and capital when you decide to sell it. If the business you purchase or start is prosperous than you have the opportunity to make a lot of money on your investment, of course if you are an active owner it will also require a lot of work on your part to make things work.

These are just three ways that you can diversify your investments. Other ways include cash, managed funds, wine, gold and many others. The key to most successful investing is making the right choices, getting the right advice and doing it for the long term. Nothing worthwhile ever came quickly. Before making any decisions to invest your money, it's best to see someone for professional and individual advice.

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