How to Balance a Portfolio That Is Heavy on Real Estate

Diversify a portfolio that is heavy on real estate.

While real estate can be a good investment, it's never wise to put all your eggs in one basket. If your real estate investments decrease in value, you could come into financial hardship, especially if you are living off of your investments or using their profits to pay off debt. Luckily, you can invest your money in many other vehicles aside from just real estate. A diversified investment portfolio that is not too heavy on one type of investment can save you stress and greater potential loss if value declines in one or more investment vehicles.

Instructions

1. Research what investment vehicles your bank offers. Offerings vary by bank, but most generally offer vehicles that include certificates of deposit, bonds, Treasury Bills and high-yield savings accounts. Discuss investment options with a banking representative and choose according to how much risk you feel comfortable with and how high of a yield you desire on your money.

2. Invest in precious metals. Depending on the state of the financial market, precious metals "can act as a hedge against economic turmoil," according to Forbes, which states that gold, silver, platinum and palladium are all good bets to diversify a portfolio with since the metals usually hold their value well when financial markets head south.

3. Inquire with your employer about 401k and IRA options that your company may offer. If you are self-employed, contact a financial adviser or bank to discuss retirement savings options. Many companies sponsor matching funds in employee retirement accounts, so the investment can pay off if you continue to deposit funds for an extended period of time.

4. Research mutual funds to invest a portion of your money in. Professional investment companies offer people the chance to invest in mutual funds that are led by fund managers. These experienced fund managers invest the money to the best of their abilities in top-earning stocks in the stock market. Investing in a mutual fund can be a good choice if you aren't that stock-savvy but still want to expose some of your funds to the market without having to do extensive stock research yourself.

References

• Treasury Direct: Treasury Bills
• Forbes; Investing in Precious Metals; Michael Sanibel; June 2010
• Union Plus: Employer-Sponsored Retirement Plans
• CNN Money: What Is a Mutual Fund?
• The New York Times; "Bank Bonds Have a Sturdy Footing"; March 2009
• The Wall Street Journal; "Design Challenge: How to Make Stocks Safer for Older Investors"; Tom Lauricella; July 2009