Maintain a diversified mix of assets to spread risk from "summary" of John Bogle on Investing by John C. Bogle
Maintaining a diversified mix of assets is absolutely crucial in the world of investing. It's a simple concept really - by spreading your investments across different types of assets, you can reduce the overall risk in your portfolio. This is because different assets tend to perform differently in various market conditions. For example, when stocks are doing well, bonds may not be performing as strongly, and vice versa. By holding both stocks and bonds in your portfolio, you can potentially offset losses in one asset class with gains in another. This helps to smooth out the overall performance of your portfolio over time. Furthermore, having a diversified mix of assets can also help protect your investments from specific risks associated with individual companies or industries. If you have all your money invested in one company or sector, you are at the mercy of the performance of that company or sector. But by spreading your investments across different sectors and industries, you can reduce your exposure to any one particular risk. Additionally, maintaining a diversified mix of assets can help you take advantage of different opportunities in the market. For instance, if a particular sector is performing poorly, you can still benefit from gains in other sectors that may be doing well. This can help you achieve a more consistent and stable return on your investments over the long term.- Maintaining a diversified mix of assets is a fundamental principle of investing that can help you manage risk, protect your investments, and take advantage of opportunities in the market. By spreading your investments across different types of assets, you can potentially improve the overall performance of your portfolio and achieve your long-term financial goals.
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