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Diworsification: When too much diversification hurts your investments

The article from MSN Money discusses the concept of "diworsification," a term coined to describe the negative impact of over-diversification in investment portfolios. It explains that while diversification is traditionally viewed as a strategy to spread risk, too much diversification can dilute potential returns and complicate portfolio management. The piece highlights that excessive diversification might lead investors to hold onto underperforming assets, reducing overall portfolio performance. It also touches on the psychological comfort of diversification, which can sometimes lead to complacency, causing investors to overlook the need for active management or strategic rebalancing. The article suggests that investors should aim for an optimal level of diversification that aligns with their investment goals, risk tolerance, and the need for simplicity in managing their investments.

Read the Full MSN Article at:
[ https://www.msn.com/en-us/money/investment/diworsification-when-too-much-diversification-hurts-your-investments/ar-AA1xY5f7 ]