This Periodic Table of Return on Investment Shows Why You Really Need to Diversify
Diversification – allocating your money to different types of investments is a critical strategy for protecting your money and helping it grow. If you want proof, all you need is a chart showing the best and worst asset classes over the past 20 years.
Select one of the indicators on the chart and see how it changes from year to year. Only one thing remains unchanged: the ratings change every year and everywhere. The asset class with the highest annualized return in one year is at the bottom or almost in another year.
The key takeaway is diversification. From Callan, the investment consulting firm behind this study:
Callan’s Periodic Table of Investment Returns provides a strong case for diversification across asset classes (stocks versus bonds), investing styles (growth versus value), capitalization (large or small), and equity markets (US and non-US). ). The table highlights the uncertainty inherent in all capital markets.
A mix of index funds is a great option . To see what is included in each index, see Callan Investment Consulting Firm (registration required to access the PDF).
Callan’s Periodic Table of Return on Investment | Callan via my blog about money