Orange County Financial PlannerSimplify Your Financial Affairs
Patrick L. Horn, CFP
P&H Asset Management, Inc
7545 Irvine Center Drive Suite 200
Irvine, CA 92618
Office: (949) 261-7900
Fax: (949) 567-5854
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Diversification Strategies

Diversification Strategies

Investment DiversificationOne of the important parts of the investing process is diversification. In its simplest form, diversification ensures that we "don't have all of our money in one, or a few, baskets." The reality of diversification requires substantially more work. Detailed questions related to your present and your post-retirement budget must be reviewed and combined with your acceptable risk/return ratio. This is where P&H Asset Management adds value.

The analogy that we use to describe diversification is the common suspension bridge (San Francisco's Golden Gate bridge is an example). If the bridge had a few cables supporting it and one of the cables were damaged, then the bridge would collapse. For this reason, engineers design the bridge with many cable supports. If one cable fails, the entire bridge remains secure.

Diversification Process

Once the detailed questions are answered, your Financial Advisor will design a diversified portfolio for you. Depending on your acceptable risk/return ratio, a variety of investments may be included in your portfolio.

We incorporate a broad range of investment vehicles into our financial strategies.  Some of these basic types include:

  • Stocks 
  • Bonds
  • Mutual Funds
  • Exchange Traded Funds
  • Money Markets
  • Cash Management 

In addition, P&H Asset Management is fortunate to have at its disposal the services and due diligence experience of the First Allied Securities, Inc. to also offer our clients a much broader line-up of high quality investment opportunities, including:

  • Oil & Natural Gas Programs (for maximum tax deductions and diversified income potential)
  • Traded and Non-traded Real Estate Investment Trusts
  • Leasing Programs
  • Managed Futures 
  • and more.

Diversify Your PortfolioProfessional Money Management

By their very nature, the companies and municipalities that back your investments are constantly changing. In some cases they change to match the customer's purchasing trends. Other times these entities change their selling strategies or are in the process of introducing new products. Due to these changes, professional money management must be coupled to your diversification strategy.

For example, if you're nearing retirement, we generally suggest that you reduce your risk/return rating. We would now put more emphasis on principal protection and income generation and would adjust the Portfolio Manager and Investment Sector accordingly.

Closing the Loop

Diversification and Professional Money Management make a powerful team. However, for the best results, P&H Asset Management will update your financial plan on at least an annual basis to stay on track.

Bottom Line

What does this mean to you? When you have your investments distributed across a variety of key sectors (Stock, Bonds, REITS, Managed Futures, Equipment Leasing, Oil and Gas, etc), if one particular sector or several have a negative event, only a small portion of your portfolio is negatively impacted. By combining diversification with professional money management and feeding back this information into a financial planning process, you are able to proactively reach your retirement goals.