Portfolio Diversification

A well diversified portfolio can balance weak performance in one investment with good performance in another, increasing return potential and reducing risk.

Non-Diversified Portfolio
$100,000 placed in a single investment earning 5% a year for 20 years, with no other changes to principle.

Diversified Portfolio
The same $100,000 split into five $20,000 investments, each earning a different rate of return, (in one case, showing a loss), for the same 20 year period.

Total return for particular period is the ending redeemable value of initial investment at the end of the period shown, assuming annual reinvestments of all income during the period. The returns shown are hypothetical and do not represent the returns of any particular investment or investments. Actual returns on any particular investment will depend on the particular market and risks applicable to that investment.

Asset allocation and diversification does not guarantee a profit or protect against a loss. All investing involves risk, including the potential loss of principle.