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Diversification Rule

Do not invest more than 30 percent of the total value of your portfolio in any one sector and no more than 20 percent of the total value of your portfolio in any one industry.

Additional Comments:

As simple as this rule is, it is profoundly helpful as you build, manage, and grow your portfolio of stocks. Often, you will find several great stocks you want to have in your portfolio, and if you were not following this rule, you could easily find yourself significantly overweighted in one sector or industry.

Staying diversified will keep you out of trouble. It will keep you from letting greed manage your portfolio instead of commonsense rules.

Related Terms:

Index Funds
An index fund is a fund that follows a passive investing strategy, meaning that the fund ...

Spreading one's assets across a wide variety of investments within a portfolio to minimize the impact ...

Investment Manager
The individual who manages a portfolio of investments; also called a portfolio manager or money manager. ...

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