In this interview with Forbes, Dave Ragan, CFP®, AIF, President of Grunden Financial Advisory, Inc., sheds light on the common misconception that simply owning a variety of U.S. stocks and mutual funds equals diversification.
True diversification, he explains, involves spreading investments across different countries, industries, and asset classes to avoid concentrated risk. By diversifying globally, investors reduce their exposure to the ups and downs of any one market or economy. Ragan also highlights how global diversification not only helps manage volatility but can also improve long-term performance as different regions grow at different times. This allows investors who are globally positioned to avoid having to predict which market will lead next. Ragan advises, “Don’t let familiarity dictate your investment strategy. Just because something feels comfortable doesn’t mean it’s the best long-term move.”
