Asset Classes - Diversification Or Bet It All On Black?

3 Asset classes
The 3 main asset classes are stocks or equities, bonds or fixed income, and money markets or cash equivalents. These are terms that I have seen over and over again in my research on investing in the stock market and at first was totally confused by them. What are they and whats the difference?

How does each one perform differently?
Each one performs differently depending on what the market is doing and how it is changing.
Equities or stocks have historically outperformed the other classes, however they tend to be more volatile and bring more risk.
Fixed income or bonds are investments that are set up to pay out at a set interest rate over a set period of time. They are safe but the potential return is less than that of equities.
Money markets or cash equivalents are the lowest returning of the 3 asset classes but the safest. They provide a minimum return on investment.

Diversifying across these three main classes can help to lower your risk and improve chances of steady gains. Mixing very safe with a little bit of risky has proved to be a better method than betting it all on black! I guess it depends on what kind of a gambler you are.

Are you diversifying your investments across asset classes?

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5 Easy Tips for Taking Control of Your 401(K)

When my current employer decided that the business was growing at a consistent rate and that she wanted to offer a 401(k) retirement plan to employees, I was stoked. When she decided she would match at 4%, I was even more stoked! A combined 8% of my earnings will be going to my retirement fund instead of taxable income to fill Uncle Sam's pockets at the end of the year. Sounds great to me! But how do I get the most out of my 401(k)? Keep reading for my 5 easy tips for taking control of your 401(k).

1. Roll over old 401(k) - Do you have a 401(k) from a previous employer that's just sitting out there in space? I did for years. At one point I totally forgot about that $2,500 just sitting there in that account! When I remembered my money, floating there in space, I decided to take control and suffer through what I thought would be a really boring and painful process of rolling it over. Turns out, it was quite simple. One short filled-out form later and my new 401(k) was authorized to withdrawal and deposit the $2,500 from my old 401(k). Done!

2. Increase your contributions - Every time I get a raise or a bonus I increase my contribution. It could be as little as a 1% increase. Regardless this is an important step if you want your investment to grow larger and faster. And besides you won't even notice that 1% or more is gone when it comes out of a raise or bonus!

3. Match the match! - What you contribute to your 401(k) is going to depend on a lot of different factors. Are you in debt? Is your job stable or are there layoffs in the works? Could you better use the money to build up your 3-6 month emergency fund? I decided that the best thing for me is to match what my employer is going to match. Until my debt is paid down, I will stay at this comfortable level. I can't see passing up free money!

4. Picking the Investment - There are a lot of choices out there with different 401(k) plans. Bonds, money markets, stock mutual funds, value funds. It's really going to depend on your risk tolerance and years till retirement. You're going to need to do your research on this one. (Stay tuned for a more intense 401(k) investment-picking blog post to follow!)

5. Don't borrow - Leave it alone! The only way it will grow is if you continue to contribute to it and let it grow up to be a be strong pile of cash!

Take control of the management of your assets. If you don't understand something about your investment then ask. But remember, no one cares more about the safety of your money than you do.

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How Can I Make My Money Work for Me?

People often ask me why I got so interested in the topic of financial freedom and the means of getting there. Well, first of all the topic is money. That's a pretty interesting topic, especially if you're a young girl like me, living in one of the biggest most exciting cities in the world... and you are broke. But the light bulb really went off when I was introduced to a book called, Rich Dad Poor Dad by Robert Kiyosaki a few years ago. It was a quick read, I flew through it in a weekend. A real page-turner.
One of the biggest tips I took from that book was that I should work my 9-5 but I should also work on MY BUSINESS. My business? What did that mean? It meant that I should be making my money work for me by building my assets. This was eyeopening for me. I was raised to think that you work hard, you get a job, you stay at that job, and you're grateful for it. No one ever told me that I could be working on MY BUSINESS and creating wealth at the same time! 
So what does it mean to build your assets and make your money work for you? Assets are things, both tangible and intangible, that you own that have value and can produce wealth. An example of a tangible asset is real estate. A great idea for someone who has cash to throw down on some property and then rent all or some of it out. 

Things to think about: 
*Work on MY BUSINESS. 
*How can I attain assets and build wealth?
*What types of assets could I own that could put me on the path to wealth?

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