15 ways to ruin your financial future: Not diversifying your portfolio

The latest market meltdowns probably have you downright jittery, and rightfully so. It's pretty scary when big investment firms and other financial institutions end up needing a life raft. The stock market's lost a lot of value, your 401k is in the toilet and, well, you might feel like Chicken Little. Remember him? "The sky is falling! The sky is falling"!

OK. Don't panic. There are some things that you have a degree of control over and they can help prevent you from making costly financial mistakes. One strategy you can deploy in these turbulent economic times is to begin diversifying your investment and savings portfolio.

By not diversifying your portfolio, for example, keeping only a handful of stocks, you run the risk of tying your fortune to the fate of a single company or sector. Invest just in stocks and you are exposing yourself to market volatility -- the kind we're currently experiencing. Prolonged exposure may put you in the hole for a long time and make it very difficult to recover. Why should you put yourself at risk like that?

Don't miss the rest of our series on 15 Ways to Ruin Your Financial Future!


For my own part, I bought an apartment in New York City less than two years ago, so my funds are, well, not exactly plentiful anymore. But what I do have left, I stowed in a cash management account with my brokerage house. There's a Roth IRA and another retirement account, CDs, a handful of stocks and a mutual fund. I have no bonds.