Learn the truth! 🤔💰 Common investing mistake: Diversification vs. Diworsification!

Описание: Diversification is the golden rule of portfolio management, and involves spreading your investments across various assets, sectors, and regions, minimising risk (if you define volatility as risk, which is a stupid idea, but that’s a topic for another short).

It does not make sense to put money in your 25th idea if you can put more money into your best idea, and in actuality diversification turns into diworsification and will dilutes your returns and limits your potential for growth in the long term.

But this is not a one-size-fits-all strategy. If you have a long runway, don’t care about short term volatility and you know what you are doing, diversification does not make sense at all, since it is protection against ignorance. Select some good investments and stick with them.

If you are approaching your retirement or you don’t want to spend time researching then diversification is a good strategy. You will get all the diversification you need using a broad market index fund. That was one minute, see you tomorrow.

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