How to Know if You Are Diversified?

In this edition of The Motley Fool's "Ask a Fool" series, Motley Fool analysts Jason Moser and Brendan Mathews take a question from a reader who asks, "How can we truly know if we are diversified?"

Jason and Brendan both see diversity as a somewhat subjective measure as it depends on where the investor is in his or her investing life, along with the person's tolerance for risk. Investors who are trying to grow their wealth, for example, may want more exposure to stocks. One of the simplest vehicles for diversity in this case can be an index fund pegged to the S&P 500 which will give an investor outstanding diversity with low costs. Investors who are closer to retirement, though, are more focused on protecting their wealth; they will want to add more fixed-income investments into their portfolio to minimize risk while still aiming for a reasonable rate of return. Either way, diversity is in the eye of the beholder and will require some self-examination in any situation.

So what's the best investing strategy?
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2885461, ~/Articles/ArticleHandler.aspx, 10/24/2014 4:39:23 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement