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PORTFOLIO DIVERSTIFICATION: FINDING THE SWEET SPOT
05/22/2015

In the latest edition of the AAII Journal, Jordan Kimmel offers his thoughts on portfolio diversification and finding the sweet spot for individual investors. Diversification is an important topic because individual investors have been exposed to several conflicting messages. It seems to Kimmel that institutional investors have taken an almost comical approach of using too much diversification, while individual investors often take an overly risky and financially dangerous approach by holding concentrated portfolios. The big Wall Street firms want their clients to be widely diversified-limiting the chance of a client's portfolio "blowing up"-while continuing to collect their annual management fees. In his opinion, investors do not need to give in to planned mediocrity. You can both eat well and sleep well. The key is for investors to assess their own tolerance for the short-term volatility that comes with trying to generate higher returns and then build and manage a portfolio accordingly... HIGHLIGHTED EVENT: Are you a new investor with limited knowledge about options? Attend an Options Industry Council (OIC) Investor Education Seminar near you ...

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To help address the need for greater financial literacy, the American Institute of Certified Public Accountants (AICPA), the national, professional organization for all Certified Public Accountants, launched its award-winning 360 Degrees of Financial Literacy effort in May 2004. Combining grassroots, state-driven financial literacy models, with free resources for the public, and tools that CPAs can use to volunteer to educate Americans of all ages on financial topics, the program provides a comprehensive approach to making informed financial decisions critical at various stages of life.



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