“Make sure you diversify.”
It may be the most common piece of investing advice investors receive.
More common than all the other popular advice.
Rebalancing, Asset Allocation, and Dollar Cost Averaging.
The problem is that diversification is often treated as the strategy itself.
Rather than a tool within a broader 401(k) investment strategy.
Diversification does not mean counting mutual funds.
The assumption that more mutual funds means less risk.
The stock market asset classes are correlated.
Spreading 401(k) monies across many mutual funds.
Does not automatically diversify.
401(k) mutual funds with different and confusing names.
Hold many of the same underlying stocks and stock market sectors.
Your 401(k) can appear diversified but invests in the same stocks.
The number of mutual funds you own in your 401(k) now.
May look and feel diversified.
But there is a gap between perception and reality.
It is never how many 401(k) mutual funds you own.
It is what stocks and markets sectors you own in those mutual funds.
Don’t trust the names of your 401(k) mutual funds.
Individual stock and stock market sector holdings.
Reveal your actual 401(k) stock market risk.
Want to find out your current level of 401(k) stock market risk?
Let’s connect and I can share the details.
