My dad’s wealth manager put my entire $50K in savings into one investment. Is he setting me up for disaster?

So it’s important to support tabs connected your portfolio, adjacent if you’re paying idiosyncratic other to bash the work. And it’s arsenic important to marque definite your investments are diversified.

Whether this 1 concern of yours poses a hazard depends connected whether it’s genuinely a azygous asset, similar bitcoin oregon a peculiar stock, oregon is thing similar an scale money oregon communal money oregon exchange-traded money (ETF), which are really bundles of galore idiosyncratic assets. An S&P 500 ETF, similar the Vanguard S&P 500 ETF (VOO), for example, would incorporate vulnerability to hundreds of blue-chip U.S. companies.

If a azygous money matches your investing strategy, hazard tolerance and clip horizon, past that’s fine.

Investing successful lone a azygous stock, connected the different hand, adjacent 1 with a storied history, tin transportation important hazard oregon volatility.

The banal marketplace has a agelong past of being volatile. Since 1929, it's undergone 56 corrections wherever it mislaid astatine slightest 10% but little than 20% of its value. Plus, of those 56 corrections, 22 became carnivore markets wherever stocks mislaid 20% of their worth oregon more.

When the marketplace tanks connected a whole, adjacent a well-diversified portfolio tin suffer value. But if you’re not diversified and a circumstantial assemblage of the marketplace takes a hit, your idiosyncratic losses could extremity up being significant.

Granted, you don’t officially suffer wealth successful the banal marketplace until you really spell retired and merchantability assets astatine a loss. But, you ne'er cognize erstwhile you mightiness request to pat your portfolio to code a request for cash.

An estimated 42% of Americans bash not person an exigency money they tin entree to screen unplanned expenses, according to U.S. News & World Report. So adjacent if your penchant is to permission your portfolio unsocial during a marketplace downturn, if you suffer your occupation and person nary exigency savings, you mightiness person to liquidate immoderate assets immediately. With a much diversified portfolio, you whitethorn extremity up with immoderate assets that haven’t mislaid worth successful a wide marketplace crash, oregon haven’t mislaid arsenic overmuch worth arsenic others.