Guide to Investing in Today’s Tough Market

This investing guide for 2012 and 2013 is written because the investing scene could get ugly, and to be prepared you’ll need to get back to investment and investing basic and diversify across the board.  Simply by investing in mutual funds the average person can diversify across all four asset classes – so this is really a guide to investing in mutual funds to survive and prosper financially in 2012, 2013 and beyond.

In the world of investing I suggest you view all of the investments in the world as belonging to one of four different asset classes: safe investments, bonds, stocks, and alternative investments.  Mutual funds make investing simple, because major fund companies manage diversified portfolios for investors in all 4 different asset investment classes.  Here’s a short investing guide covering all 4 investment classes.  If you invest in the right funds you’ll have a balanced portfolio and be prepared if economic conditions in the world get worse in 2012 and into 2013.

SAFE INVESTMENTS

Money market funds are safe investments that do not fluctuate in value and pay interest income based on current interest rates.  Advantages: safety and high liquidity (easy quick access to your money if you want to move it or cash in).

BOND FUNDS

Investing in intermediate-term bond funds holding medium to high quality issues is the way to go here.  Advantages: earn more interest than with funds holding the highest quality issues, with less risk than funds that invest in long-term bond issues.  Long term bonds will be big losers if interest rates rise substantially.

STOCK FUNDS

Diversified stock funds that invest in high-quality large corporations paying dividends of 2% a year or more are your best investment option.  Advantages: more price stability and less risk than growth funds paying little if anything in dividend income.

ALTERNATIVE INVESTMENTS

Invest in a selection of specialty funds, choosing those that specialize by investing in equity securities (stocks) in the following sectors:  gold, real estate, natural resources, and foreign investments.  Advantages: this adds even more diversification to your investment portfolio to help counterbalance the possibility of losses in other investment areas.

As a general investing guide to asset allocation:  Invest more in safe investments and bonds if you are conservative; and emphasize stocks and to a lesser degree alternative investment if you are an aggressive investor.

P.S. If you want to learn how to invest in mutual funds check out my blog.