Why You Need to Be Diversified to Protect Your Portfolio

Surely you’re aware that it’s smart to diversify your portfolio, but have you made a firm commitment to it? If not, then now’s the time.

Dollar bills on clothes line
(Image credit: Getty Images)

With the swings we’ve seen in the stock markets lately, investing can feel like a risky venture. We all want to reduce risk in our lives, but many people don't think about diversifying their portfolios and how it relates to risk reduction. Some people may think that they are diversified, but in reality they hold a basket of similar stocks or bonds that all react in the same way to market events.

So, what is proper diversification, and how does it reduce risk? This article will discuss what a diversified portfolio should look like and how it reduces risk to help you reach your financial goals.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Matthew Stratman
Financial Adviser, Western International Securities

Matt Stratman is a financial adviser at Western International Securities in Southern California. His focus is helping business owners and entrepreneurs who are planning for retirement. With a strong, client-centered approach he creates personalized investment strategies to help them reach their financial goals. Matt is extremely passionate about retirement planning, believing the better prepared a person is, the more fulfilling their retirement will be.