A basic tenet of investing is that too many eggs in
Let’s say you opt for a mix of 60% stocks, 30% bonds,
one basket could be too risky. For example, if all your
and 10% cash, a fairly common allocation. Drill a bit
money is invested in a single stock or industry and
further. Your stock investments should be spread
it crashes, your financial well-being will fall, too. But
across many companies, industries and economic
you might not be aware of how many of your eggs are
sectors, like technology, health care, financial
actually in the same or a similar basket, especially
stocks, and energy stocks. That’s because there are
when it comes to Canadian stocks. There are many aspects to diversification. By far the
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times when one sector might do poorly but another performs well, balancing one another.
most important consideration is broad asset-class
INSTANT DIVERSIFICATION
allocation -- a fancy way of saying your mix of stocks,
One quick and easy way to diversify into many
bonds, and cash.
stocks is through mutual funds or exchange-traded
SIDEONE MAY 2021
