{"id":41432,"date":"2018-01-12T02:00:56","date_gmt":"2018-01-12T07:00:56","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=41432"},"modified":"2017-12-23T09:16:18","modified_gmt":"2017-12-23T14:16:18","slug":"investing-why-you-should-diversify","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2018\/01\/12\/investing-why-you-should-diversify\/","title":{"rendered":"Investing: Why You Should Diversify"},"content":{"rendered":"<p align=\"center\"><iframe loading=\"lazy\" width=\"853\" height=\"480\" src=\"https:\/\/www.youtube.com\/embed\/_AsIuR-z_nw\" frameborder=\"0\" gesture=\"media\" allow=\"encrypted-media\" allowfullscreen><\/iframe><\/p>\n<blockquote><p><strong>Marginal Revolution University<\/strong><br \/>\n<strong>Published on 30 Aug 2016<\/strong><\/p>\n<p>So far, we\u2019ve been telling you what not to do when investing. Here\u2019s what you should do: diversify.<\/p>\n<p>Don\u2019t put all your eggs in one basket. Definitely, don\u2019t put your investment money solely in your employer\u2019s stock. That\u2019s very loyal, but it\u2019s a terrible strategy. Just think of Enron\u2019s employees. They had huge chunks of their retirement funds in company stock. Upon Enron\u2019s collapse, many employees who were once multimillionaires ended up with almost nothing.<\/p>\n<p>As you can see, diversification is much safer. Diversification reduces risk by spreading your investment across different assets, doing so without reducing potential returns. Plus, modern financial markets make diversification easy. For example, our favorite investment instrument is the low-fee index fund. These funds mimic a large market basket of stocks, like the S&#038;P 500. The sheer variety in the fund is what mitigates the risk. It\u2019s diversification for the win.<\/p>\n<p>A quick reminder, though. Choose an index fund with low fees. Fees may seem trivial, until you watch them eat away at your investment. Imagine this: take a hypothetical $10,000. Invest that in a fund with a 1% fee, and you\u2019ll have roughly $57.5K after 25 years, assuming an average 8% return. Now, invest the same $10K, in a fund with a 0.2% fee.You\u2019ll get roughly $70K over the same quarter-century.<\/p>\n<p>Our point is \u2014 when it comes to investing, simple is best. So for example, if your employer offers a 401K, take the offer! <\/p>\n<p>That being said, you might believe that the market is irrational. Anomalous, even.<\/p>\n<p>No worries. <\/p>\n<p>Next time, we\u2019ll tackle behavioral finance to see if you can profit from anomalies, and irrationality.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Marginal Revolution University Published on 30 Aug 2016 So far, we\u2019ve been telling you what not to do when investing. Here\u2019s what you should do: diversify. Don\u2019t put all your eggs in one basket. Definitely, don\u2019t put your investment money solely in your employer\u2019s stock. That\u2019s very loyal, but it\u2019s a terrible strategy. Just think [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":35193,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[25],"tags":[571,1093],"class_list":["post-41432","post","type-post","status-publish","format-standard","hentry","category-economics","tag-investment","tag-macroeconomics"],"jetpack_featured_media_url":"https:\/\/quotulatiousness.ca\/blog\/wp-content\/uploads\/2016\/06\/favicon.png","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-aMg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/41432","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=41432"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/41432\/revisions"}],"predecessor-version":[{"id":41433,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/41432\/revisions\/41433"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media\/35193"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=41432"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=41432"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=41432"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}