First String Investments

As any sports enthusiast would surely know, a team’s first string players are always those which have the highest potential and in which the coach can depend on to get the job done. Whether in sports or in the world of finance, first string players are put in place to win. When setting up a portfolio of investments you want to have several types of investment products within it to mitigate your risk of loss.

First String Investments in a Diversified Portfolio
If you are looking to invest in a diversified portfolio, your first string investments are chosen because you (or your portfolio manager) feel they have the best chances of realizing the greatest profits for you. You might have some stocks, some bonds, municipal funds, mutual funds, whole life insurance policies, forex investments and the list goes on. Of those, your first string investments will usually carry a bit of risk because you specifically chose them for their high-yield potential.

Building the Game around Your First String Players
Investments can be likened to a game of football. All week long the coach works his team and each and every play is developed with his first string players in mind. Why? Because those are the players that coach feels can win the game. It’s kind of pointless to waste countless hours developing game strategies around second and third string players because they are only there as back up for the first string in the event they cannot play or are pulled from the game. An investment portfolio is similar in its composition. The fist string investments will hopefully make a huge profit, but in the event that they are ‘injured’ or pulled out of the running, any loss should be mitigated by the second and third string investments within the portfolio, your portfolio’s Hail Mary out of desperation investments.

How to Choose First String Investments
Let’s be perfectly clear here. There is no reason to throw caution to the wind by choosing first string investments that ‘rumor has it’ will provide yields that are off the charts. That’s just plain reckless! Of course there are investors out there who thrive on risk and have the financial resources to do just that. But for the ordinary investor, especially those new to the world of finance, it is important to understand how to choose those first string players properly. Yes, you should choose investment products that are expected to gain. However, you should base your choices on sound analysis of the market and market trends. Talk to a knowledgeable broker first and ruminate over options which are available. Then and only then should you choose your first string investments.

Your broker or portfolio manager is much like the coach you had in college. He or she will choose investments that are forecast to show significant gains within their respective markets. Your second and third string investments will play it progressively safer. You may not realize such great profits from them, but you should continue to see those assets increase in value over time – albeit slowly. If, for any reason, one of your first string players fizzles out before the bell, hopefully your second and third string will step up to the plate. However, unlike a game of football, coach isn’t going to come up after a devastating loss and tell you that it’s not whether you win or lose, it’s how you play the game. You’d probably slap him! You are playing the market to win so you take great care in choosing your first string, but think long and hard about your second and third as well. They might one day be your Hail Mary.

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