Diversification is the second most important factor in reaching goals.

How you diversify your portfolio is key to moderating your risk and driving your portfolio’s performance.¹ In fact, it’s even more important than the individual securities you choose.

Manage your risk three ways:

Diversify across asset classes with a long-term asset allocation that combines small- to mid-cap and large-cap U.S. securities, international securities, bonds and cash.
Diversify within asset classes to reduce the risk of concentrations in any one market sector, individual company or country.
Diversify equity styles by holding both value and growth equity securities to reduce the risks associated with strategies that perform better or worse in certain markets.

Avoid this costly mistake.

A review of over two million investors’ portfolios found that nearly one-third of them held more than 20% of their assets in just one stock.² What if it’s another Enron?

What you can do now

Log in and use Schwab Portfolio Checkup® Diversification and Equity Concentration screens to see how well your portfolio is diversified.
Find diversified mutual funds with Schwab’s Mutual Fund OneSource Select List®. These funds are professionally managed and diversified according to their particular investing strategy.
Let us diversify your investments for you with our all-in-one fund portfolios—Schwab Portfolios™ or Schwab Managed Portfolios™.

Previous Principle | Next Principle

1. Diversification strategies do not assure a profit and do not protect against losses in declining markets.
2. Source: Data from more than two million Schwab client portfolios as of February 28, 2007, excluding those in Schwab Private Client.
3. Source: Schwab Center for Financial Research, with data provided by Ibbotson Associates, Inc. Stocks are represented by total annual returns of the S&P 500® Index, and bonds are represented by total annual returns of the Ibbotson U.S. Intermediate-Term Government Bond Index. The return figures are the average, the maximum and the minimum annual total returns for the portfolios represented in the chart, and are rebalanced annually. Returns include reinvestment of dividends, interest and capital gains. Indices are unmanaged, do not incur fees or expenses, and cannot be invested in directly. Past performance is no guarantee of future results.

(0308-5753)

Talk to us about our financial guidance

Call 800-790-7715.
Send an email.
Open an account.
Find a Schwab branch.