Rethinking Diversification: Are you spreading too thin?

“Don’t put all your eggs in one basket.”
It’s the first thing most investors hear. Sounds wise. Sensible. Fool-proof.

But here’s the problem, somewhere along the way, “diversification” got lost in translation. It’s now used as an excuse to own a bit of everything, often without rhyme or reason.
And instead of reducing risk, this scatter-gun approach can leave your portfolio bloated, expensive, and confusing.

The problem with “Owning it all”

Nick Murray, one of the greats in financial advice, says diversification means you’ll “never own enough of any one thing to make a killing, nor enough to get killed by it.”

That doesn’t mean buy everything in sight. Yet many portfolios today include shares, bonds, cash… plus gold, infrastructure projects, real estate schemes, venture capital, and other “alternative” investments.

Sometimes these extras are valid. But more often they’re added because they sound exciting, or to tick a box, leading to:

• Overlapping exposures
• Higher (often hidden) fees
• Investments that don’t behave as expected when markets shake

The end result? A portfolio that’s busy, not brilliant.

The real definition

True diversification isn’t collecting investments like fridge magnets. It’s about Picking the right baskets (example: global equities, bonds, cash, property)

Once you’ve nailed your mix, then diversify within those categories. Not across dozens of unrelated ones.

This sharpens your focus on the real drivers of wealth, setting goals, committing enough money, staying disciplined, and riding out market cycles.

Many eggs, right baskets

True diversification isn’t collecting investments like fridge magnets from every holiday. It’s about choosing the right baskets, then spreading your eggs inside them.

For building serious long-term wealth, the “right basket” is global equities, thousands of great companies you use every day. That’s the diversification that matters.

The bottom line: Is your portfolio genuinely diversified, or just overstuffed? A quick reality check now could be the smartest investment you make all year.

Main image: Pexals