You have all your investments evenly distributed among stocks and bonds and have notes on your calendar to assess your investments yearly — just in case they become unbalanced due to uneven growth or loss in the markets. That means you're diversified … right?
Yes, you are, and you can pat yourself on the back for paying careful attention to this important detail in your financial-planning schedule. There's just one potential problem: You may not be diversified enough.
True diversification of assets goes beyond stocks and bonds. It starts at a higher level, beginning with your financial goals, your asset allocation, a review of your risk tolerance and the amount of time you have to invest. It narrows down to assessing the size of the companies and the types of specialty assets with which you're involved. When we meet with clients to discuss diversifying their investments, we're essentially creating a very personalized portfolio to address all of these items.