Monthly Archives: November 2014

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It just isn’t as easy as it used to be…

margieWhen I started my career in 2001 diversification was easy. You bought domestic and international, stocks and bonds. This typically ensured that if the USA was doing bad, your international investments would go up in value. If the stock market was down, your bonds would be up. Creating a diversified portfolio was easy. Welcome to 2014.

The global economy has made it much tougher to really diversify domestic and international risk.  And while bonds pay an interest rate, the combination of the historically low yields, as well as the fact that eventually rates will go up and bond prices will decline, means that there is no assurance that holding bonds to counteract a drop in the stock market will work.

It’s my belief that these are the exact reasons that you need to be working with professionals that truly understand diversification and what is available for investors to really have investments with low correlation (think reaction) to each other. A well diversified portfolio could include various investment products. It could also include a strategy of transferring your lifetime income needs to an insurance company via an annuity.

Having an understanding of what you own and why you are buying it is important not just upon purchase, but periodically to ensure that the investments you hold still meet the needs of your goals and are still investments that represent a promising area of the economy. Just because you may own stocks, mutual funds and bonds, doesn’t necessarily mean you have diversity. Knowing what the companies own and what is in your funds is necessary.

As our global economy becomes more entwined, making sure that the companies you own aren’t overlapping with other investments helps keep your portfolio truly diversified. With the high number of mergers and acquisitions occurring this year, we are constantly running X-ray’s of our clients investments to make sure that overlap isn’t occurring.

So talk to your financial planner about what their viewpoint on diversification is and how they are currently meeting this objective for you. If they can’t answer it, or you don’t think they truly understand it, then look elsewhere.

Margie Shard is a CFP® and founder of Shard Financial Services, Inc., a financial planning and investment strategies firm in Fenton, MI. To contact Margie please call (810)714-5566 or For more information on Shard Financial Services, Inc., please visit


Securities offered through LPL Financial Member FINRA/SIPC.