This chart perfectly sums up why it's important to have a diverse investment portfolio

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This chart perfectly sums up why it's important to have a diverse investment portfolio. (via CNBCMakeIt)

Stocks and bonds are broad categories that encompass several asset classes. There are large-cap, mid-cap and small-cap stocks, and government, corporate and mortgage bonds, for example. You want to own a mix since one asset class might overperform one year but underperform the next. The more diversified you are, the lower your risk of losing a lot of money at once since they will ideally balance each other out.

Take a look at this chart from Edelman's report, which shows the performance of 16 major asset classes over the past 10 years. Each color represents a different asset class."The Long-Term Financial Impact of Covid-19 And What It Means for You" by Ric Edelman As the chart shows, there's no clear pattern of how an asset class will perform best year after year.It's nearly impossible to pick and choose which ones will be top performers at any given time. "If you had invested in each of these 16 asset classes and market sectors equally over the past 15 years, your return would have been 8% per year," Edelman writes. "But if you had missed the top three each year, your return would have been only 4% per year.

While one particular investment may outperform others one year that doesn't mean it will continue to do better than others over the long-term. "Nobody knows what the best performers are going to be next year," Edelman writes. "Therefore, the only way you can hope to capture the returns of the markets is to be invested in all of them all of the time."

Source: News Formal (newsformal.com)

 

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MakeIt Duh

MakeIt

MakeIt Investments don’t care about race.

MakeIt because it keeps the investment liberals happy

MakeIt Is it so that you look great in yellow, a bandana which says you're fashionable but not uptight, a cup of coffee, and can feel more at ease with some nice houseplants?

MakeIt Problem with this is that you never really get a good return and you will always underperform everything. Diversifying the hell out of your portfolio is not the best way.

MakeIt I guess my portfolio needs some affirmative action.

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