Keeping Your Options Open: Why Diversifying Keeps Your Hand Strong

When you play a game of poker, the idea of the game isn’t just to win. Instead, it can be wise to follow the famous quote from Rocky II: “This guy don’t just want to win, you know. He wants to bury you, he wants to humiliate you”. Moving away from the world of poker and the world of boxing, that can sometimes be what it feels like when you go to a financial advisor and receive lectures about what you have been doing wrong and what you should be doing with your money!

As most of us don’t really want to be browbeaten by someone who then takes our money, let’s put it out there: the advice that is often given is to look to diversify in all aspects. Diversification is a term that can leave some unsure as to what they actually need to do. However, put simply, it means never betting big on just one single investment.

Following the advice of diversifying, therefore, means that you want to look at a range of investments. This means if you play your cards right, you don’t need to end up at an advisor paying for him or her to tell you what to do if you are prepared to look at different options yourself. With this in mind, and following the same advice from the poker world, which includes a growing number of online Texas Hold’em and Omaha Hi-Lo operators, it is good to know when to keep your options open, when to go all in with your money, and when to accept it is time to fold and look elsewhere. These are all good lessons that help you to realize you can get your investments earning healthy returns for you.

Why Not Stick Your Money in One Investment?

If you have seen an investment that’s making a good return, it can be tempting just to pop all your money in that one pot and think that a brilliant return is inevitable. Sadly, though, enough people do this and see their money disappear for the UK government to have made a website telling consumers why diversifying is key.

If that one investment you’ve made goes wrong, you are left with the chance that all the money from your initial investment, let alone your earnings from it, could go up in smoke, leaving you very much out of pocket. To have a strong investment portfolio, you need to know that you haven’t gone all in when the risks related to doing so are just way too high. After all, if you were playing a game of poker, you wouldn’t necessarily follow the approach of Will Kassouf, who famously bluffed his way to a big win by being ‘nine high like a boss’!

How to Keep Your Options Open

If you are going to diversify, then you need to follow the idea of Will Kassouf to a degree and be prepared to take a risk (had his bluff been called it would have been a very different ending to his hand!), but you also need to make sure that you have aces in the hole so that you can be sure of having near guaranteed success in your investment, even if the return might be minimal.

Indeed, by looking to keep your options open so that you can give up on your risky options like certain stocks and shares and put money into longer-term bonds or even gold and silver or property, you can find that the world of investment becomes one where you can start to see the rewards of having a truly diverse portfolio that can react to changes in the world of politics and beyond. By doing this, you will be following the golden rule of poker: know the strength of your own hand and make sure that when you take a risk, you do it in a way that if you lose, you won’t be out of the game.