The age-old idea of not having all your eggs in one basket is considered timeless wisdom, but could it be working against you? In truth, diversification is a double edged sword. The benefit that it provides comes at a mighty cost. When it comes to investing, most individuals aren’t aware of the hidden price they pay for this so-called “free lunch.”
The unfortunate reality is that nothing in this world is certain. In fact, the only thing in life that is certain … is that nothing is certain. This is especially true when we talk about money and investing. Since we can’t deal with certainties, we’re forced to deal with probabilities. Therefore, probabilities become the lens through which we must view all things investment related.
You’ve heard of the gender pay gap, but are you aware of the gender investing gap? Put simply, women do not invest to the same extent that men do. As a result, when retirement rolls around, women end up with only two-thirds as much money in their portfolios. This is a BIG problem, especially when you consider that women in the U.S. tend to live on average 6.5 years longer than their male counterparts.
Stocks? Bonds? Cash? Where should your money be invested? Over the last few decades it has become commonplace to talk about stocks and bonds from a fixed-allocation perspective. This approach to portfolio management has become ingrained in our society; however, it is a very dangerous way to approach investing.
Target-date funds have increased in popularity during recent years as a result of investors continually searching for easy, one-size-fits-all solutions to manage their money. But just how appropriate are these funds for the average investor? The answer may surprise you.
