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Special Report

Finding Real Diversification

Adding more asset classes, not more securities, is the best way to diversify.

The fact that diversification is crucial to reaching your financial goals isn't exactly an earth-shattering concept. For years, experts of all stripes have been urging investors to not put all of their eggs in one basket.

It's not bad advice. Having a group of assets that perform well while other parts of your portfolio are doing poorly can help smooth returns and reduce risk over time. It also diminishes the risk that one of your holdings will have an enormously destructive impact on your portfolio.