The Investor Diary Entry #15: February 21, 2023
In this entry we are going to discuss what is diversified investments, and how my wife and I are starting to implement it. Between yesterday and today, things have been happening that will help us implement such diversification in the future.
In our previous entry I talked about how my wife and I found out about the Cashflow game. Now we try to play Cashflow board game on daily basis. The game requires that the player builds a personal income statement and a balance sheet.
After a while of playing the cashflow board game, we decided last week to build our own real life income statement and balance sheet. Once it was finished it was very easy to start planning for our future, and the best use of our assets.
Task Distribution
My wife and I have different passions, but we found a way to unify those passions that would lead to unified family goals. Based on those passions and capabilities we distributed the main things that we are going to work on between us. I would continue with my responsibilities at the social entrepreneurial venture as a Co-Founder, I would develop skills in stock investments and online business.
My wife will concentrate on the real estate investments, the construction business of her family, and develop small trading ventures.
The way we distributed our tasks made us realize that this will help us in creating a healthy investment diversification. We also created a multilevel diversification plan.
My Diversified Investments
This is a very strong title that I wish it was true. It should have been the case, but unfortunately although I was looking hard to create such a diversified investment portfolio that would generate a considerable cashflow for myself. Unfortunately, my trials ended with me finding all the wrong ways.
Fortunately this paragraph starts with fortunately. I met my wife. It was her that drew our attention to where we should look for opportunities either for investment or to increase our financial capability.
Multilevel Investment Diversification
The first level of diversification was in our revenue structure. Our current revenue structure is not diversified, it is basically made of salaries and fees. Our planned revenue structure is diversified into; trading, investment, services and social events.
Each revenue stream is diversified in the following manner;
- Trading:
- Finding dealers in different sectors and investing money with them so that they can trade their specialty with our money. Therefore, this section is already diversified into the different sectors.
- Trading Stocks and Forex: this concept is still under study as it might not fit into our intended life style.
- Investments:
- Real Estate: This area is also diversified into a third level of diversification which is; apartments, houses and lands.
- Stocks: The third level of diversification in this area is variant based on our stock diversification strategy. When we first started out, we were following a certain strategy based on what we have learned. Now we are developing a new one based on our own experience.
- Services and Events:
- Currently there are two major types which are coaching/consulting, and social activities for social development purposes. This is a future project that we are working on that would become an umbrella for different services and activities.
Recent Developments
We have structured the income statement and balance sheet in a way that it reflects the current situation but also help us to change into the desired future.
The income statement was not a very cheerful one, but the balance sheet was amazingly surprising, as the owner’s equity figure was beautiful and gave us a great push as we were able to see how we can move into the future that we want.
The stock market investment part is not going very well since the beginning of 2023. The market went up leaving behind scarce opportunities for buying in. In our previous entries we talked about this and how we are going to tackle it.
The great development is happening in the real estate part as we have great meetings between yesterday and today. We are very excited about this area. The real estate area presents many options in trading, investing long term, investing for immediate cashflow…etc.
One of the trading opportunities that we entered has started to show positive results. Next week the plan is to push one area which has been stuck for months now.
Conclusion
Diversification is very exciting. I know that specialization is more focused and allows for experience to grow faster, but diversification is not only safer, but the scope and options for opportunities grows much more than being specialized.
My wife and I are trying to make a balance between diversification and specialization by dividing the work load between us. This way we can diversify our total structure while each of us specializes in a fewer areas.
This is the way we answered the question of what is diversified investments. We widened the scope of revenue streams and diversified each stream as well as creating a third level of diversification below the structure.
Should everybody do this? Of course not. This is what we are finding to be suitable for us. Each one of us should decide what suits us. At the beginning we might copy this or that strategy until we get the hang of things firsthand, then we move on to make our own methodology in anything in life.
Do not forget excitement of experimentation and learning new things. This note is for me.
The Investor
Tuesday 21 February 2023
About The Author
I started to look into individual stocks in January 2022. I created this diary initially for myself to track my investing progress, and second as a place that I can share my ideas publicly hoping that others will share their ideas and learn from each other, and lastly as an online business where some links that I share are affiliate links, and if anybody bought anything by clicking those links I will get a commission based on that successful sale, which of course will not affect the price that you are buying the product or service at.
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