#DiversifyYourAssets

What's diversification?

Rather than trying to pick potential winners and avoid potential losers, diversification calls for owning a piece of the entire market to increase your chances of long-term success. As the saying goes, "If you can't find the needle, buy the haystack."

Diversification helps lower your overall investment risk by tapping into a concept known as correlation. Correlation is used to show how different investments move compared with one another. When you combine investments that don't move in the same way, your portfolio has low correlation, which can protect against extreme declines. For example, when stock prices fall, bonds typically (but not always) go up. By owning both, you can reduce big swings in your portfolio's value.

So how can you diversify your portfolio? True diversification involves owning stocks from various industries, countries, and risk profiles. It also means investing in other asset classes beyond equities, such as bonds, commodities, and real estate, whose performance isn't usually in sync with stocks during different market environments. These assets work together to reduce a portfolio's overall risk and volatility.