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All Posts Tagged With: "401(k)"

Attention 20-Somethings: Forget Diversification

May 7th, 2008 • kevin duffey • 5 comments • Related • Filed Under

I just read another Yahoo Finance article that gave the same repetitive lesson on investing: diversify, diversify, diversify.  As far as I’m concerned, you have two options in investing.

The first option is diversification; however, not diversification how most recommend which is buying a bunch of different stocks in a bunch of different industries. Why spend so much effort on simply trying to match overall market returns? If this investment approach appeals to you, achieve diversification by simply buying an S&P Index Fund and that’s it. Continue pouring your money into this position over time and you should perform inline with long term historical average returns.

Your second option is to attempt to outperform the market which is what we here at 20s Money are fighting towards. Diversification is not the path to achieving superior returns.

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