Taming the “What-if Monster”: The Crucial Role of Portfolio Diversification

When it comes to investing, one monster looms over investors: the "what-if monster." This monster is all those thoughts that keep you up at night as you think about the worst-case scenarios and fear that if one thing goes wrong, your entire investment strategy could be at risk.  Doubt is normal, but it isn't always helpful. The what-if monster can be debilitating and make it hard for investors to have confidence.   

With investment portfolio diversification, however, any investor can transform their relationship with the what-if monster and feel prepared for the ups and downs of the market. 

What is Diversification and Why is It Important?

Diversification simply means creating a mix of varied investments, ensuring that investors do not put all their eggs in one basket. That means making sure your asset mix includes stocks, bonds, and short-term investments and then aligning to your investment time frame, financial needs, as well as your comfort level with volatility. Working with a financial planner allows you to review and discuss different levels of risk and return potential and ensure you feel confident with your investment strategy. As your assets grow, periodic redistribution of your assets is essential to ensure your portfolio remains balanced and diversified.


  • Spreads out and reduces risk
  • Mitigates unsystematic risk (it doesn't help if the entire market collapses)
  • Allows you to choose more investments
  • Preserves your capital
  • While it can sometimes result in lower returns, it comes with a significant reduction in risk.

How to Ensure Your Portfolio is Properly Diversified

It's best to seek the help of an expert to ensure you minimize your risk and maximize your return. Here are some things we can help with to let you build a resilient portfolio to support your long-term success:

1.     Investment research. While you may get some enjoyment from doing this yourself, an expert can help you find opportunities you might not have thought of, spot red flags, and make the best decision. We can also help you find investments that fit your personal values.

2.     Portfolio diversification strategies. Portfolio diversification strategies vary depending on your investment horizon and risk tolerance. We can help you pick the right strategy to support your short- and long-term needs. You should also diversify across industries and take into account disruption.

3.     Monitoring and Rebalancing. No portfolio can sit there, untouched. Monitoring your portfolio and making changes to deal with world events, market changes, and exciting new opportunities can be almost a full-time job. We can help you keep an eye on your portfolio and make adjustments, rebalancing as needed. Also, if you find watching your stocks makes you anxious, don't worry, we can handle it for you.

4.     Behavioral guidance. Some people chase shiny stocks. Others are so risk-averse they miss opportunities. We can help you learn to find a good middle path, developing a long- term financial plans built to withstand the inevitable ups and downs of the market.   

5.     Tax efficiency. Finally, we can help you manage your portfolio in ways that minimize your tax burden. We can help you decide how much to put into long-term funds for the future, how much to keep liquid, and when the best time is to withdraw money.

Quieting the "What-if Monster"

A diversified investment portfolio helps focus on your time, energy, and resources and what you can control and let go of what you cannot. Reach out and schedule an appointment with us. The what-if monster lives in every investor, but you can reduce the chatter of this monster by having us create a diversified portfolio, thoughtfully put together to weather market fluctuations.


Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. You should discuss any tax or legal matters with the appropriate professional.


The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Evan Shear, CFP® and Dale Crossley, JD and not necessarily those of Raymond James.

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