Don’t put all your eggs in one basket. This saying has been around a long time and still holds merit today. The purpose of diversification is to spread out risk by investing in different categories or sectors. Is this a guarantee of success? No. But the hope is that by doing so, you will increase your odds.
Investing everything you have into one individual stock may or may not be a good strategy. If you had invested in Walmart in the 1990s, you would be happy with the results. Had you invested in Enron however, the results would be much different. Rarely is the same asset class the top performer every year. Take a look at the Callan Chart, a color-coded periodic table that graphically depicts historical investment returns over the last 20 years for various asset classes, ranked from best to worst. Contact your financial team today to discuss how you can incorporate diversification in your portfolio.