Invested to Be Molested by Kelly Mitchell

Author:Kelly Mitchell
Language: eng
Format: mobi
Tags: scam, investing, mutual fund, financial advisor, stocks, money manager

Diversification Beyond Stocks

Investopedia Staff on January 25, 2014

One thing even the newest investor understands, or has at least heard of, about a portfolio is diversification - blending a variety of asset classes to reduce exposure to risk. But a well-diversified stock portfolio is just one component of putting together the best possible portfolio.

Diversifying not just among different stocks, but among different assets, is how an investor can truly mitigate risk. Even with a well-diversified stock portfolio, an individual is still exposed to market risk (or systematic risk as finance professors like to call it), which cannot be diversified away by adding additional stocks.

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