It makes sense to diversify your investments because no single asset class performs best in all economic environments and different asset classes tend to react differently to the same event.
‘Don’t put all your eggs in one basket’ is sound investment approach.
Although we would go further and say diversification is the most important factor in achieving long-term investment goals, as it reduces the risk associated with a given expected return.
Thus, diversification enables you to achieve a higher return for the same level of risk.
And ETFs play a crucial role in all of this, as they provide instant diversification – if used correctly.