Kick Your Portfolio in the Assets by Diversifying

Physician's Money Digest, February 2007, Volume 14, Issue 2


Physician-investors are always lookingfor portfolio diversity, but often don'tknow which direction to look. A currentarticle delves into someassets that have been touted as "hotbuys" but may in reality prove to be potentialtraps. The following are some investmentsto approach with caution:

•Timber looks like an attractive commoditybecause of stable logging incomeand the value of growing trees. Investorsshould beware, however, that tree growthwon't speed up so you can cash out, andtimber investments require heavy managementand capital gains.

•Rare coins, like timber, move in oppositionwith bonds and have little in commonwith stocks. But, coins must be keptsafely stored from theft or damage at alltimes, incurring extra costs, like depositbox fees. And, coins require costly expertappraisals and are subject to a capitalgains tax rate.

•Gold is a classic commodity for alternativeinvestors and seems like an appealingoption, but gold can maintain its value foryears without fluctuation. That means youcan get stuck holding on to gold withoutgains for longer than your long-term goals.

•International real estate could be themost lucrative alternative to stocks andbonds. But the travel expenses, foreignconnections, and resources it requiresoften negate its overall value.