Video Blog: What Do Diversification And Asset Allocation Mean?

Attorney Jeffrey P. Coleman defines two important qualities of a well-rounded investment portfolio: “diversification” and “asset allocation”.

Video Transcript:

Diversification and asset allocation are two of the most important parts to a successful investment portfolio. Diversification means having your assets involved in a number of different industries; people, for instance, who had a lot of investments in the financial services industry, really were set back in the meltdown that occurred in the financial services industry in 2008. Diversification is very important.

Asset allocation is allocating your assets among different kinds of investments: you can have a bond with a company or you can own stock in the company. Those are two kinds of different asset ownership. There are also insurance products that can help you redefine and distribute your assets.

Asset allocation and diversification are two of the hallmarks of a well-designed portfolio.

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