When it comes to investing, there are a multitude of strategies and approaches that can be taken. Some investors believe in taking a more hands on, active approach, while others prefer a more passive, long term strategy. But one thing that all investors can agree on is the importance of diversification.
Diversification is the practice of spreading your investments across a variety of different asset classes, industries, and geographic regions. By doing so, you can reduce the risk of your portfolio being too heavily weighted in one particular area, which can help protect you from market downturns and volatility.
But while diversification is crucial, it's also important to be mindful of the fees associated with your investments. High fees can eat into your returns over time, so it's important to find ways to simplify your strategy and reduce unnecessary fees.
One way to do this is by investing in low cost index funds or exchange traded funds (ETFs) that track a broad market index, such as the S&P 500. These funds typically have lower fees than actively managed funds, making them a cost effective way to achieve diversification.
Another way to simplify your strategy and reduce fees is to consolidate your investments with a single brokerage or financial advisor. By consolidating your accounts, you can often qualify for reduced fees or discounts on trading commissions, which can add up to significant savings over time.
Ultimately, the investment purist understands the importance of diversification but also recognizes the impact that fees can have on their overall returns. By simplifying their strategy and focusing on low cost, diversified investments, they can maximize their long term growth potential while minimizing unnecessary expenses.