Welcome to Part 2 in our series, "Where Does Wealth Come From?"

Today we will look at the stock markets (equities). The equities markets is one of the greatest wealth creation tools known to man.

But… the market isn't only the S&P 500.

While we hear the most about the S&P500, it is one of many academically identified Investment categories. If your portfolio consists of mainly the S&P500 and it tanks like it did in 2008-2009, then your whole portfolio is likely to tank as well.

An asset category like the S&P 500 has a long term average of 9% and U.S. Small Value has a long term average return of over 12%. It is possible, through proper diversification and discipline, to experience an average annual return somewhere between those rates. (Gross returns, before investing related fees)

Owning asset categories with dissimilar price movements (one goes moves down in value while the other is likely to go up), brings a balance to your portfolio and helps you optimize growth.

In This Episode We Look At:

• Growth comes from the market itself. (It DOESN'T come from gurus, timing, or trying to beat the market.)

• It is possible to get market rates of returns.

• What is DIVERSIFICATION and why is it so important?

Today's Resources and Links:

The Value of being truly diversified.

One Thing You Can Do Today to Improve Your Financial World:

• Be sure that you have a TRULY balanced portfolio.
• Own a cross-section of market categories for diversification and add a portion of fixed income (if needed) for a "cushion" against the full force of the equities markets.

What Are Your Thoughts?

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