Diversification is considered to be one of the only "free lunches" in finance. It can both increase your return and decrease your risk, with almost no downside.
For example, going from 100% bonds to 80% bonds and 20% stocks will significantly increase a portfolio's expected return with reduced risk. Another example is owning the Total Stock market (small and mid-caps included) rather than just the S&P 500.
For example, going from 100% bonds to 80% bonds and 20% stocks will significantly increase a portfolio's expected return with reduced risk. Another example is owning the Total Stock market (small and mid-caps included) rather than just the S&P 500.
http://bucks.blogs.nytimes.com/2011/09/06/why-and-how-divers...