Just as it is important in life not to put all of your eggs in one basket, the same is true with your investments. One of the best ways to manage the risk of investing is to diversify your money across many different types of asset classes, i.e. large cap stock, small cap stock, emerging stock, and bonds. This way, if one asset class performs poorly in a given year, there is a chance that another asset class will perform well and balance out your losses. This helps smooth out the volatile roller coaster of investing and will keep you invested over the long haul.
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There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. This post was contributed by Brittney Castro, CFP® professional and creator of www.FinanciallyWiseWomen.com. Brittney Castro is not affiliated with Theeverygirl.com. Brittney A. Castro is a registered representative with and securities offered through LPL Financial, Member FINRA/SIPC. California Insurance License #0F33895