Diversification works
The last 10 years have been a volatile and tumultuous ride for investors, with multiple natural disasters, numerous geo-political conflicts, and major market downturns. While
volatility might be normal, investors can help minimize some of these risks through diversification.
Chart: The worst-performing asset classes of those shown here were cash and commodities. Meanwhile, a well-diversified portfolio including stocks, bonds and some other asset classes returned 6.8% per year over this time period. The diversified portfolio also provided a much smoother ride for investors than investing in just equities.
Action Point: Markets can be volatile and even negative in
any given day, week, month or year. But history shows that both time and a little diversification can go a long way towards more stable returns.
