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Just When You Think You’re Diversified

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By tadamichi @ Shutterstock.com

What happens when everyone is invested in the same stuff? When you look at the S&P 500 and compare it to, say, target maturity funds or a total stock market index, there’s a ton of overlap.

Just when investors think they’re diversifying, a simple look under the hood shows most engines running on the same stuff. That’s not necessarily bad, but let’s not confuse it with diversification. What is a great disservice to the average investor is they read the names of their funds and feel like they are diversified. “Hey, it’s the S&P 500,” they think. “That should be good diversification.” But do they realize it’s market-cap-weighted? Can you blame them for thinking that they are diversified? With a busy life between work and family, who’s got time to spend on this stuff?

Action Line: Lucky for you, there’s me. I care about your success. Let’s talk about it if you’re serious.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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