Yes, it is smart not to put all of your eggs in one basket. Just remember the bubble burst of the internet stocks a decade ago.
But there are two other important reasons to diversify. A broader mix of investments can include those with a potentially higher return (e.g. including some stocks in a bond portfolio). Also, a diversified portfolio can provide more flexibility, for example by providing income and meeting different challenges - such as a need for reliability plus coping with inflation - all at the same time.
Mark Fischer, Certified Financial Planner
Fischer on Finance
7301 Ohms Lane, Suite 365
Edina, MN 55439
Phone: 952-881-4696
Fax: 952-881-4534
Securities offered through Multi-Financial Securities Corporation, member FINRA, SIPC. Fischer on Finance, LLC is not affiliated with Multi-Financial Securities Corporation.
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Keep in mind that while diversification may help reduce volatility and risk, it does not guarantee future performance.