4 Ways to Diversify Your Family Finance Portolio

There are numerous ways to diversify a financial portfolio. When they think of the word "diversification," many people go straight to equities. They believe that purchasing shares in a mutual fund, which spreads their holdings across multiple companies, should give them peace of mind because all their eggs are not in one basket.

Some will take this a little further by adding bonds to their portfolio, with the belief that they are more secure (albeit less profitable) because bonds have lower potential for loss, historically speaking.

The common thinking when it comes to diversification is usually summed up in those two investment vehicles, "stocks and bonds." Usually, mutual funds are just an avenue that people utilize to purchase those investments, because they don't have the time and/or the money to research and invest in profitable positions themselves.

However, there are other ways in which you can diversify your family finances. Here are few of them.

1. Fine art

Not too many people think about the option of fine art as an investment. But it's a great way to boost your family's net worth while adding something that is aesthetically pleasing to your home decor. It should be noted that in the case of exceptionally fine art, however, it might be best to leave it in a safe deposit box unless you have excellent security on your home premises.

Much like some stocks, fine art has the potential to increase in value dramatically, even over a very short period of time. This is not the rule, however. Like other investment choices, art requires some level of research and shopping around to find a bargain. For those who do their homework, though, it can be an extremely rewarding and enriching investment choice.

2. Real estate

Although most families own real estate in the form of their own residence, it's not a particularly popular choice for investment. As wealth expert Robert Kiyosaki has observed, it's best not to think of one's own home as an investment.

In spite of the recent downturn, real estate in general is still an attractive investment, however. In fact, it could be argued that real estate is an attractive investment because of the downturn. Interest rates are low and prices are down from previous highs. As of this writing, the stock market indices are off their recent highs as well.

It's quite likely that if the equities markets continue to drop, real estate will become more attractive. This will put upward pressure on real estate prices and make for some very attractive returns.

3. Penny stocks

Although stocks have been mentioned previously, penny stocks represent a completely different class of equities when compared with other, more "traditional," stocks. Penny stocks have the potential for significant upswings in prices, and they're not typically seen in mutual funds.

One excellent way to get started with penny stock investing is to follow the lead of a penny stock guru like Timothy Sykes. He offers education programs about how people can turn just a little bit of money into a lot with sound principles of penny stock investment.

4. Tax liens

When a property owner fails to pay property taxes, the county government issues what's called a "tax lien," meaning that the county has a claim on the property until the taxes are paid. The lien can be auctioned off to the highest bidder, who informs the property owner that the amount of the lien is now due to him or her, plus interest.

The interest rate can range anywhere from 5 to 30 percent. Like other opportunities for investment, this approach requires due diligence. However, if done right, it can build your family's net worth handsomely.