Don't Fall for Fake 401(k) Diversification
NEW BERLIN, Ill. (TheStreet) -- Sometimes we fool ourselves. Sometimes we think we're doing the right thing, when in fact the result is that we're not at all doing what we think we are.
I'm talking about your investment diversification. When you started your account, you were probably dazzled by the array of choices: a stable-value fund, three large-cap stock funds, a midcap stock fund, an international stock fund and two different bond funds. Recalling an article you read somewhere, or maybe your co-workers talking about around the water cooler, you knew you needed to split your investments among many allocation options. Wanting to do this diversification thing right, you split your 401(k) contributions with one-eighth in each of the funds available. You're well-diversified now, right?
Not even close, bucko.
|Just because you have investments split among several funds doesn't mean you're diversified.|
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