That’s a good question. If you were to ask 100 different investors, you would get 100 different answers.
Dave Ramsey says not to put all of your eggs in one basket. Warren Buffett says to focus on your “circle of competence”. Mark Cuban says diversifying is for idiots. Kevin O’Leary says diversifying is the only way to ensure any ROI. Simon Black says you are putting all of your eggs in one basket (that basket being the US government) unless you’re investing in global real estate and foreign currencies.
I say investing is an art as well as a science. It’s different for everyone. The most important thing is an education in financial literacy. The way I see it, diversifying your portfolio is an incredibly vague notion for an incredibly complex subject.
To one investor, diversifying might mean investing in raw land and small apartment complexes in addition to single family homes. To another investor, diversifying might mean investing in mutual funds in addition to real estate.
It’s all quite subjective.