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Questions tagged [diversification]

For questions related to diversification in investment portfolios, the practice of investing in multiple assets with the goal of managing risk.

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CAT & ILS Bonds/funds [closed]

I'm constructing an portfolio with the objective to diversify as much as possible. I would like to include securities that are uncorrelated with the financial markets. The last few days I've been ...
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3answers
147 views

What is the “definition” of a “diversified” portfolio and why a diversified portfolio is better?

A short version of my question - What is the "true" definition of a diversified portfolio and why is it better? A long version of my question - Regarding portfolio diversification, people ...
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2answers
196 views

Am I confused about how to diversify into bonds?

I held several Vanguard equity ETFs (VFIAX, etc.) I wanted to diversify into bonds (as discussed in "A Random Walk Down Wall Street"), so I sold some of them and bought BLV. As stocks have declined, ...
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Do international index funds provide diversification to domestic USA index fund?

Let's examine two exemplary passive index funds. One is international and one is USA domestic. SCHF: Schwab International Equity ETF SPY: SPDR® S&P 500 ETF Does the international index ...
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3answers
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How do I diversify with little capital but picking only those companies I want?

Is it possible to achieve a high degree of diversification with relatively little capital but still be able to determine exactly in which companies one invests and in which one not? So is there a way ...
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6answers
231 views

What, if any asset classes, acted contrarily correlated during crash of 2008

This is a meta question about diversification, and if it truly exists for passive investors. i.e. Investors investing in 401ks, IRAs, Roths, primarily using ETFs or fund with large pool of stocks. ...
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3answers
165 views

Is is good/bad to invest in too many mutual funds at a time?

I am currently investing in 12 mutual funds. 10 out of them are through SIP. Just to make it clear, SIP (Systematic Investment Plan) means buying units of mutual fund each month (or quarterly/yearly) ...
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1answer
240 views

Does it make sense to invest in multiple index funds?

The UK based investor here. I haven't found anything under "Multiple index funds" search criteria thus decided to give it a go, if there is already a similar question/answer would love to get a link. ...
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3answers
268 views

Diversification in practice: Choosing a couple of index funds (UK)

I am a newbie investor and just've opened my first trading account although haven't invested in anything yet. I want to invest solely in index funds. In the book "A Random Walk Down Wall Street" at ...
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4answers
142 views

Is adjusting my portfolio's distribution according to bad signals from news risky?

I'm distributing my investment to stock(mostly MSCI ACWI) and bond funds, Basically 60:40. I also rebalance monthly as I got paid monthly. I recently worried about the global and local(South Korea) ...
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1answer
252 views

Should I diversify? If so, into what?

I am 29 years old. I worked very hard at a well-paying (but not exciting) job and spent my vacation time buying and renovating properties. Currently, I have 4 condos with an approximate equity of 445,...
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0answers
128 views

Reduce risk of the unexpected on a long-term portfolio

I've been thinking recently what can I do to reduce risk on my long-term buy-and-hold portfolio. When I say "risk", I'm talking about rare, unexpected but highly destructive events (think Taleb's ...
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2answers
147 views

How far should I go in trying to diversify my portfolio?

I have determined the following ratio for the Equity portion of my investments: 30%: Intl Equity 40%: US large cap 30%: US small and mid cap Now, I have some funds invested in a S&P 500 Index ...
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1answer
323 views

Building an ETF portfolio: Is it even possible to diversify?

I want to start investing my money. I've decided to invest a monthly fixed amount by buying ETFs. I am currently investigating different ETFs to decide on what my portfolio allocation will look like. ...
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10answers
16k views

One of my stock positions has grown substantially. Should I rebalance my portfolio?

I'm a small beginner investor with less than 50k portfolio. One stock I hold has grown substantially than everything else and makes up 46% of my portfolio, but it is expected to keep growing and has ...
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2answers
115 views

How to allocate alternative assets?

I'm doing diversification with stocks and bonds. Basically 60%:40%. But when I'm trying to add alternative assets(like gold or REITs) or high-risk high-return bonds(like Brazil bonds), I'm not sure ...
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2answers
2k views

How to use full margin (Robinhood Gold) while staying diverse

How is one able to add diversity to one's Robinhood portfolio while utilizing near 100% of Gold (margin)? I was told in my previous post, as well as reiterated by a Robinhood Rep, that when making a ...
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2answers
1k views

Are REITs more correlated with the stock market or the real estate market?

Suppose a person has a sizable portion of his networth in stocks. He wants to diversify his wealth into the real estate asset class. For the sake of correct diversification, it will be nice to know ...
2
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1answer
109 views

Diversify your ETF portfolio from your job in the financial industry

I currently have 50% ZAG.TO, 35% XAW.TO, 15% VCN.TO. My current compensation at work is highly correlated to the performance of the financial industry in Canada (i.e. the top 5 banks). XAW holds 10% ...
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3answers
195 views

I opened my Roth IRA account. Does it makes sense to diversify my initial contribution of $5500?

This is my first Roth IRA. I am putting $5500 which is the maximum annual contribution I can make. I was planning to apply the 3 fund portfolio technique by investing this money proportionately in ...
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3answers
294 views

Is there any advantage in holding international mutual funds, even if they don't outperform domestic equities? [closed]

I've heard that, overall, international funds don't perform as well as other mutual funds, such as small, mid, or large cap mutual funds that hold domestic U.S. equities. Is this true? If so, are ...
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1answer
80 views

Diversification for large bond investments

I do all my investments with four index funds, and I currently have a fairly aggressive approach with 20% in a bond ETF (AGG) and 80% in three equity ETFs. As I get older, I'll put more money in ...
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2answers
200 views

Diversify across multiple brokers?

Right now my brokerage account has a non-trivial fraction of my total assets. It's all in a single account with Interactive Brokers. I know in theory customer funds and assets are ring-fenced, but ...
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2answers
125 views

Trade? Buy and hold? Or both? [closed]

I am now taking control of my own investments. While I've made a few in the past, including one very good and one very bad, I really don't have a clue. So I attended an intro class by a trading school ...
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5answers
388 views

Diversification reduces risk, but does this base on the assumption that expected return of each asset is always in proportion to its risk?

College teachers showed that diversification is free lunch for getting rid of part of the risk, but does this argument based on the assumption that expected return of each asset is always in ...
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3answers
172 views

Building a diversified portfolio at market high

I am a Canadian, setting up an ETF-based RRSP in Questrade. Right now I have 70% of my portfolio in Canadian bonds, the other 30% of my portfolio is in cash, in USD. I am modelling my portfolio after ...
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3answers
2k views

Should I exclude bonds from our retirement investment portfolio if our time horizon is still long enough?

My wife and I (ages 35 and 38) have 25-30 years until we reach retirement age, and I'm doing some research regarding our asset allocation. In addition to various podcasts, articles, and online posts, ...
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1answer
149 views

How to invest in a specific market without investing in a specific company?

Let's say I am bullish on "Cloud Computing" and I want to make one investment, but do not want to invest in any specific company (e.g. Amazon). How could I invest soundly in the "Cloud Computing" ...
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4answers
481 views

Why diversify stocks/investments?

I always hear people telling me things like: Diversifying your stock/investment portfolios helps ensure more profits/success. It's common to diversify portfolios (usually this is said with no ...
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2answers
289 views

Roth IRA all in one fund, or not? [duplicate]

All the money in my Roth IRA is in FFFFX. I'm making my yearly deposit. Is there any reason not to put it in the same fund? To put it another way, do I need to diversify my Roth IRA (or is that the ...
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3answers
134 views

Tax implications of diversification

I have a question about diversifying some investments. For the purposes of my question you can assume that this is not retirement investing, and that I have a diversified retirement plan already in ...
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4answers
4k views

What does a well diversified self-managed investment portfolio look like?

A lot of online blogs and investing material suggest that investing in a single index is not diversified enough to avoid some types of market risk. So the question then is, what does a well ...
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3answers
270 views

Easiest way to diversify savings

Finance has always been a bit of a black art beyond current and savings accounts, so I'm hoping this makes sense. In light of the possibility of Britain leaving the EU (that isn't the actual reason, ...
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2answers
150 views

How should residents of smaller economies allocate their portfolio between domestic and foreign assets?

Investment advice is often written from the perspective of a large domestic economy, where global effects have less impact. I live in Australia, where GDP is $1.13 trillion and our stock exchange has ...
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1answer
1k views

How does compound interest work with multiple bank accounts and percentage limits?

I found that Polish banks often offer smaller interest rates for amounts above a given threshold. For example this one (Google Translate) would make one earn 2.70% per year of amount below 100 000 PLN ...
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1answer
821 views

Historic variation in FTSE100 total market capitalization as a proportion of the FTSEAllShare total market cap?

Many years ago (in ~2000, give or take a year?) I remember seeing some discussions on The Motley Fool UK's forums about how much more diversification investing in an FTSE-AllShare tracker instead of ...
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3answers
200 views

Advice on preserving wealth in a volatile economic/political country

I'm looking for some advice on how to best position myself in an country that faces a volatile economic future in the short/mid term ahead. Some background: I live in South Africa where our currency ...
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3answers
118 views

Do developed country equities have a higher return than emerging market equities, when measured in the latter currency?

Do developing country equities have a higher return and/or lower risk than emerging market equities, when measured in the emerging market's currency? Do you have data for this over a long timeframe (...
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2answers
156 views

Should you diversify your bond investments across many foreign countries?

I already know, and so ask not, about the benefits and need of bond diversification across different kinds, maturities, and ratings (eg Short- vs Long-term, AAA to corporate). Global diversification ...
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1answer
118 views

Does it make sense to add short positions to a diversified portfolio?

Does it make sense for most portfolios to have some short position? Is there a general rule (maybe a minimum of 10% should be hedged by a short position for high growth portfolios if you have a ...
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4answers
288 views

How to buy a house without being over-exposed to real estate

Buying a house can all-of-a-sudden make 90%+ of a person's portfolio be invested in real estate, actually one very specific piece of real estate! Which is against all the advice we're given to ...
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1answer
88 views

Does the common advice about diversification still hold in times of distress

The common advice about diversification goes something like this: (just as an example) 40% us large cap 20% us govt and AA corporate bonds 20% us growth stocks 20% international equities. My ...
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3answers
228 views

Fundamentals of creating a diversified portfolio based on numbers?

There are a number of articles and posts across the internet describing how to diversify your portfolio. But, each claim typically focuses on how to allocate your portfolio rather than describing ...
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3answers
189 views

How do I manage my portfolio as stock evaluation criteria evolve?

Background: I'm a very small-time (eg. $100s), inexperienced trader. Currently, I'm buying and holding stocks that bear dividends. When I evaluate stocks, I look at certain criteria; these have a ...
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4answers
180 views

Higher returns from international markets?

I've heard that part of your portfolio should be invested in international markets. One argument for it is higher returns. However, browsing through some funds (FOSFX, FIEUX, FWWFX), all I can see is ...
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1answer
148 views

Is there any data that shows how diversifying results in better returns than just sticking to an all-stock portfolio?

Assuming that the money invested is not to be touched for decades (so the risk of temporary market downturns is irrelevant in this case), many suggest that you should still diversify your portfolio ...
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1answer
138 views

Portfolio Diversity : invest $4000 into one account or $1000 into 4 accounts?

I have a simple question : regardless of portfolio diversity and how it could be a more stable source on income, i'd like to know what system will produce more money ? $4000 into one account symbol $...
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1answer
140 views

Hedge against Oil industry?

Since I work for an oil and gas producer in Canada, I receive company shares as a performance bonus, resulting in a disproportionate amount of oil investments in my current portfolio. Is there a good ...
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5answers
3k views

Why might a robo-advisor service like Betterment be preferable to just buying a single well-performing index fund like SPY?

Edit: I think it would be beneficial for any answers to include whether the answerer uses a diversified portfolio or not in their own finances, and whether they have any affiliation with Betterment or ...
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3answers
4k views

Should I buy my house from my landlord?

The situation This is a specific situation, but hopefully the general themes of the question will be helpful to others. I read the question at In general, is it financially better to buy or to rent ...