Why you need diversification.
Upon beginning this blog and in the initial stages of my exploration into the world of investment I thought I could succeed based on a minimalistic and single stepped approach. In stocks. I knew enough about diversification to stick to mainly market index funds and held entire countries or industries in a fund. I calculated contributions, previous returns and time to reach a naive conclusion that all would be fine if I stuck to a cookie cutter plan. Simplicity, time and consistency would do the heavy lifting.
What I didn’t really account for, or didn’t take into consideration was the ever changing landscape of the world, the markets and economies. Highly unlikely circumstances, such as what if the countries, industries and even type of investment I was putting my whole net worth in and betting on became obsolete, lost their dominance or experienced decades of downturn.
Continued..