Don't Put All Your Investment Dollars in the Same Basket

Larry O. Doss Monday, April 6, 2009

With Easter swiftly approaching, perhaps it is a good time to remind that it isn’t always a good idea to put all one’s eggs in the same basket - Whether it’s real eggs; or investment and financial eggs.

The expression "Don’t put all your eggs in one basket" generally means not risking the loss of everything by placing all your financial investments or future goals on one and only one option.

The perils of putting all your eggs in one basket ought to be obvious once the basket falls off the wagon, or experiences some unfortunate event. Wherever the basket goes, the eggs must surely follow.

Often investment counselors or advisors will suggest a diversified approach to reaching future financial goals. This approach will many times see investors dividing investments into such categories as:

(1) Real Estate
(2) Stocks
(3) Bonds

When you stop to consider that real estate is currently experiencing prices much more affordable than a few years back, coupled with the ability to write off mortgage interest and property taxes on tax returns, it becomes a real opportunity to discontinue throwing money down the drain on rent. There are currently wonderful tax credits available for first time Home Buyers - the likes of which haven’t been previously seen.

Additionally, if you become interested in acquiring rental property, there are additional tax incentives available, such as depreciation, and the cost of repairs.

In addition to placing funds in stocks and bonds for future growth and goals, consider real estate investment as well.

By not putting all your eggs in one basket, you reduce the risk of having the single basket, meeting calamity, and ending up with no eggs at all.


Written for GreatWest GMAC
by: Myrl Jeffcoat

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