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In Response to diversify by aball1941
If you want to save your money and have it there at some future time, there is only one way to completely avoid the losses due to the ups and downs of the economy including inflation: inflation-protected treasuries.
If you want to earn money with your money, then there are a number of ways to invest it for a return, equities, bonds, and real estate being three common ways of dividing investments into classes. In any of those three investment classes there are three ways to invest, directly or through managed accounts or through mutual funds, which are sort of a combination of the other two in that the investor selects the funds and the fund managers select the specific investments.
If you are saving your money, there is no diversification. If you are investing, diversification is not essential but it can help the investor perform of one of the tasks needed to avoid the ever-present downside, that of balancing and spreading risk variables. Diversification does not mean just having multiple investments, it means having different investments. There is diversification within and among investment classes.
Personally, I do not care for real estate (the call to fix a broken toilet at 2 am in the morning is one of my bad dreams) as an investment and my bond investments are minimal, very low risk and low reward from my 401k. I invest in equities, principally, and I invest directly because I enjoy studying my investments and would do so if I paid someone to manage my money, which I see no need to do. Within that class, I try to restrict myself to dividend-paying, bluechip United States companies that have a low PE. I am still able to diversify my investments among differing products, from technology to basic materials, and among company size, location, growth strategy, and business parameters.