100 Words On: The Importance of a Balanced Investment Portfolio

Conventional wisdom says it’s unwise to put all your eggs in one basket. Likewise, having a large portion of your portfolio in any single asset class — be it stocks, bonds, commodities, or cash equivalents — is financial suicide. Maintaining a well-diversified balanced investment portfolio helps minimize risk by spreading out your investments across multiple classes; think of it as a form of free investor’s insurance that protects you from catastrophic losses.

The bottom line: Diversification is a critically prudent and important financial planning strategy. And although it won’t eliminate losses in a severe downturn, it will reduce the risk of complete annihilation.

Photo Credit:wolfsavard



Comments

    • 2

      Len Penzo says

      Absolutely! That’s surely necessary for keeping a portfolio balanced over time. (Maybe I should consider expanding these 100-word posts to 125.)

    • 5

      Len Penzo says

      Good one! When it comes right down to it, I guess rental properties are also part of the mix (for those willing to dabble in it).

  1. 8

    says

    Wait, but I thought US Treasuries were the best risk-free investment? Haha, len just wanted to get you going. A lot of people are going to be shocked when their 3% yielding long-dated bonds decline in value massively when one of these debt-ceiling scams doesn’t get voted through.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>