Here's How Much Diversification You Actually Need -- and Why Falling Short Is So Risky
A lack of diversification can singlehandedly put your portfolio at risk.
Overview
If your parents or grandparents ever warned you against putting all your eggs in one basket, you've already learned the basics of diversification. As simple as the concept seems, failure to stay on top of diversification can sink your financial plan. Here's how.
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Diversification doesn't simply mean owning many assets. It means owning things that don't all rise or fall at the same time. If all your investments move together, you're not actually diversified, no matter how many assets you own. But here's the good news: You don't need hundreds of shares to create a diversified portfolio. Research finds that you can minimize most risk once you hold a few dozen well-spread shares.
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Source
Originally published at www.fool.com.