Diversification is the Sane Alternative to Betting On One Investment

One of the cardinal rules of being a successful long term investor is diversification.

This is a principle that virtually every investor is familiar with and one that every financial advisor holds out to be gospel.

Then why is it that we often look back upon our investment portfolios with frustration and disappointment when one particular area is under performing while another is shooting the lights out?

If this is what proper diversification is designed to do, than why does it create so much consternation?

Here’s a great article to help provide some perspective on the subject.

Cheers,
Coach Mark

 

Diversification Is the Sane Alternative to Betting Big on One Investment

You made a huge mistake last year with your money. You know this now, right? The only investments in your portfolio that did very well were probably United States stocks. Bonds may have held their own, but everything else was just pitiful. International stocks performed horribly and emerging markets weren’t much better. What were you thinking? Clearly you missed a big opportunity in 2014. You should have skipped diversifying and gone all in on United States stocks. But seriously, with no proven model for picking the next winner, can you really afford to bet big on any one investment? If you had to, could you even pick one, and only one, investment for the rest of this year? The answer can’t be no! Don’t you know by now who the winner will be in 2015?
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Financially Fit for Life: The Value of Advice

Listen to a new episode of Financially Fit for Life, dealing with the value of advice. The episode covers how to find the right advice from the right advisor, and how advice can help you identify trends while staying on your financial plan.

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