Investing and Diversification

How your money is invested among many different kinds of stocks, bonds, mutual funds and ETFs—also called “portfolio diversification”—plays a far greater role in generating the financial results you want than focusing on any individual security.

Effective portfolio diversification reduces the likelihood that a downturn in a few securities you own will dramatically impact the overall value of your portfolio.

But diversification is just one aspect of effective portfolio management. You also need to:

• Choose an appropriate asset allocation strategy with an optimal mix of stocks, bonds and cash for each of your retirement, college savings, and taxable accounts
• Monitor the performance of your mutual funds, as well as the fees they charge, to make sure they’re not taking a huge chunk of your hard-earned gains
• Periodically rebalance your portfolio’s asset allocation to its target mix without taking a huge tax hit

Investors often struggle to figure all this out on their own. That’s why many turn to a fee-only, fiduciary investment advisor in the Wealthramp network to manage their portfolios.