When It Comes to Investing, Diversification Is Not All the Same

You might think your portfolio is safe, but are you absolutely sure? A steep market drop could be an expensive wake-up call.

(Image credit: © 2016 Lotus Carroll)

When the stock market took a dive in 2008, plenty of people thought their portfolios were well protected against anything too dire. After all, they had carefully made sure they had a diversified lineup of investments, as nearly everyone recommended. No putting all the eggs in one basket for this savvy group.

Yet, after the market had crashed and the metaphorical smoke cleared, they realized their portfolios had lost close to 40% of their value (for some individuals, maybe more). That left some investors confused. How could I lose this much money, they wondered, if my portfolio was truly diversified?

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Jeff Knoedl, RFC®, IAR
President, Knoedl Retirement Advisors

Jeff Knoedl is president of Knoedl Retirement Advisors. He is a Registered Financial Consultant with the International Association of Registered Financial Consultants and an Investment Adviser Representative. Jeff is a licensed life and health insurance professional in Arkansas and has passed the Series 65 exam. He has been in the industry since 1996, and opened his own independent practice in 2003.