GO
Loading...

This optimistic investor is bullish on portfolio diversification

Mediaphotos | E+ | Getty Images

Given the stock market's recent bull run, many individual investors might be tempted to abandon the notion of diversification within their portfolio. But not Derek Bullard.

Late last year, the 43-year-old entrepreneur from Charlotte, N.C., sold a mental health services company that he co-founded in 1999 to a private equity firm and invested his multimillion-dollar windfall in short order.

With his losses in 2008 still fresh in his mind, Bullard worked with a financial advisor to assess his risk tolerance and chose to invest in a relatively conservative portfolio of dividend-paying stocks, bonds, exchange-traded funds and cash equivalents. So far, he said, the portfolio has earned an average return of about 5 percent.

Worried about the prospect of rising interest rates, he has looked to hedge his risk on the fixed-income side by focusing on short-term bonds. He owns municipal bonds but has steered clear of holdings tied to financially troubled states.

(Read more: Jim Cramer on portfolios.)

Though Bullard is upbeat about the economic outlook, he hasn't forgotten the battering his individual retirement account took during the financial crisis.

"Banks are loosening up on lending money now, and deal flow is more robust," he said. "I think the economy is heading in the right direction, but I still remember pretty vividly what happened in 2008."

--Anna Robaton, Special to CNBC.com

Contact Playbook

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Financial Advisor Council

  • Cathy Curtis, CNBC Financial Advisory Board

    Founder, owner, Curtis Financial Planning

  • Ric Edelman

    Ric Edelman is chairman and CEO of Edelman Financial Services, author, TV and radio host, and frequent speaker on personal finance.

  • President, CEO, Francis Financial

Latest Special Reports

  • Alibaba Group headquarters in Hangzhou, China

    In-depth coverage on Alibaba's IPO, including roadshow coverage, expert analysis, and Alibaba's stock price.

  • Unlock the keys to building a successful long-term financial plan: manage your money, grow your money, and protect it.

  • The day you stop working will be here before you know it, making preparation now key to enjoying your golden years.

Financial Advisors