72% of Investors Are Making This Serious Mistake -- Are You?
The stock market has been charging bullishly upward for years, so it's no surprise that about half the respondents to a recent Wells Fargo/Gallup poll were concerned that a major correction is due. What is surprising is that a good 72% of the respondents to the poll had made little or no effort to diversify their portfolios.
Diversification is a simple way to protect your investments during market corrections, and failing to do so can lead to disaster.
In investing terms, diversification means spreading your money across a wide range of different investments to make a well-rounded portfolio. The benefit of diversification is that no matter how the stock market or the economy is doing, at least some of your investments will be thriving -- and if a single investment tanks, it won't drag your entire portfolio down with it. Diversification lowers your risk and also gives you more options in the event you need to sell off some investments to generate cash.
Source: Fool.com
