Diversification is an important topic, but one that isn’t well understood. And I don’t just mean by the general public. Investors aren’t great at understanding it either, apparently. Less than half of investors surveyed by the ASX (46%) claim that their portfolios are invested. And even that group holds just 2.7 financial products on average. A further 40%, who held 1.6 products on average, said they knew their portfolios were not diversified enough. But most worrying of all, 15% of investors admitted they didn’t know if their investments were diversified or not.
So how do you know if your investments are diversified? Or if they are diversified enough?