One of my favorite games at my hometown\u2019s fair is the \u201cCupcake Wheel\u201d.\u00a0 For a quarter you can buy a square on the board.\u00a0 They spin a big wheel with corresponding numbers on it and if the wheel ends on your number you win a box of homemade cupcakes!<\/p>\n

I remember one year they had more than enough cupcakes to go around so they allowed me to buy the entire board, guaranteeing that I would win my coveted box of cupcakes.\u00a0 Rather than choosing only one or two squares and risk that neither would be the winning square, I put my money on all of them.\u00a0 You could say that I spread my risk or diversified!<\/p>\n

In the world of investing there are no guarantees and you can\u2019t eliminate all risk. However, diversification is a powerful strategy in both mitigating risk and increasing your opportunity for growth.\u00a0 Much like putting my money on every square got me my box of cupcakes, spreading your money among various investment opportunities will, on average, provide a better investment return than selecting only one individual investment.<\/p>\n

It\u2019s against the rules of the \u201cCupcake Wheel\u201d to allow me to buy the entire board.\u00a0 It is a game of chance after all, and the objective is to raise money for the local firemen.\u00a0 The more squares I have to buy to win, the more money is raised.\u00a0\u00a0 This last year as I was heading over to win some cupcakes, I was discussing strategy with a family friend when she shared her strategy with me. \u00a0She plays the game with some members of her family.\u00a0 Each of them buys the maximum number of squares allowed per individual, essentially buying the board.\u00a0 This guarantees that one of them will win and then they share the cupcakes.\u00a0 What a brilliant plan!\u00a0 Their individual costs are reduced, they avoid the risk of losing altogether, and they share mutually in the profits.\u00a0 Sound familiar?\u00a0 It should, a mutual fund is pretty much the same concept.<\/p>\n

A mutual fund allows a group of investors to pool their money together and invest in several different investments.\u00a0 As an investor, you invest in a group of investments for a fraction of what it would cost you to buy each individual investment on your own. \u00a0Not only does a mutual fund help you reduce your risk and costs, it also provides you the opportunity to share in the returns of the total portfolio, making it a powerful and popular investment tool.<\/p>\n","protected":false},"excerpt":{"rendered":"

One of my favorite games at my hometown\u2019s fair is the \u201cCupcake Wheel\u201d.\u00a0 For a quarter you can buy a square on the board.\u00a0 They spin a big wheel with corresponding numbers on it and if the wheel ends on your number you win a box of homemade cupcakes! I remember one year they had […]<\/p>\n","protected":false},"author":2,"featured_media":324,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","sharing_disabled":false,"spay_email":"","jetpack_publicize_message":""},"categories":[3],"tags":[77,12,10],"jetpack_featured_media_url":"https:\/\/sarahcarrfinancial.com\/wp-content\/uploads\/2013\/07\/MP900430475.jpg","jetpack_publicize_connections":[],"jetpack_shortlink":"https:\/\/wp.me\/p9rIpx-59","_links":{"self":[{"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/posts\/319"}],"collection":[{"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/comments?post=319"}],"version-history":[{"count":4,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/posts\/319\/revisions"}],"predecessor-version":[{"id":332,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/posts\/319\/revisions\/332"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/media\/324"}],"wp:attachment":[{"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/media?parent=319"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/categories?post=319"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/tags?post=319"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}