Critical Mistake #1: Concentration Risk.
If you suffer from concentration risk, you have too much money invested in a single company, asset class or asset type. If you primarily own stock and bond mutual funds, you may be exposed to concentration risk and not even know it!
Critical Mistake #2: Improper Asset Correlation.
One objective in wealth management is to create a balanced portfolio that works when the market is up and when the market is down. The best way to do that is by combining assets that respond differently to market conditions or have “low correlation” to one another.
Critical Mistake #3: Misguided Diversification.
While it is true that asset allocation is essential to maximizing portfolio performance, few people truly have a properly diversified portfolio. That’s because some financial advisors, and many investors, think that asset allocation simply means owning a lot of different investments. It doesn’t. Keep this in “M.I.N.D.”© - Multiplication Is Not Diversification!.