The Benefits of Diversification

Risk Management | Income Generation | Capital Preservation | Long-Term Growth Potential | Rebalancing | Simplicity

Owning a variety of assets offers steadier growth potential through a portfolio of 60% stocks and 40% bonds.

This chart shows annual returns for asset types over the past 15 years. Note the risks of over-concentration in any single asset class versus the benefits of owning a variety of holdings, which may avoid market extremes and provide a smoother investment journey.

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Invest wisely

• Consider your needs. While diversification matters for any investor, your best proportion of stocks, bonds, and other assets depends on your goals, risk tolerance, and stage of life.
• Diversify within asset classes. Not all stocks and bonds are alike. A combination of large- and small-cap stocks, and bonds of varying duration, risk, and yield offers further diversification.
• Rebalance regularly. Left alone, a diversified portfolio can become imbalanced as individual assets fluctuate. Periodic rebalancing helps you maintain the best portfolio for your goals.
• Invest for the long term. The benefits of diversification rise the longer you stay invested. That’s good reason to stick to your strategy and avoid rash decisions in the heat of the moment.

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