A.I.M. Users Bulletin Board

[aptus]

Hey Rien,

"If you are in the market to GET rich, then diversification is a killer."

I look at it from a slightly different perspective. If you're trying to get rich, you still need to diversify or else you're exposing yourself to risks that, in all probability, will cause you to lose money over the long-term and inhibit you from getting rich.

The slow, steady and consistent building of wealth gets you rich. On the other hand, if you're trying to get rich quickly, then I would agree that diversification is a killer. However, even then, most people who try to get rich quickly fail.

The only time I would agree with not diversifying is if someone is starting out and doesn't have enough investment funds to properly diversify. At that point it doesn't make much sense to diversify because the commissions would become a significant expense. In that case you invest your funds in a good stock and hope for the best (or invest in a good index fund, but that's another story).