How to ensure your portfolio is truly diversified.
The old proverb, "Don't put all your eggs in one basket", has endured because it's true. As an investor, it is essential to have a diversified portfolio, so that when one asset class (like stocks) goes down, you have other assets (like bonds) that aren't necessarily affected.
But simply putting a little here and a little there isn't enough to create a truly well-diversified portfolio. Investors must make sure the choices they make align with their personal goals and risk tolerance. If you're diversifying by sector. t's also critical to choose the right companies in that sector. And it's also essential to avoid over‑diversifying—because at some point, becomes nearly impossible to keep track of all your assets.
Learn more about the importance of diversification and how to effectively diversify your portfolio with our free guide. At Zacks Advantage, we can help you create a well-diversified that matches your individual goals, needs, and comfort level.