Should you diversify your portfolio in retirement?

Once you've entered retirement, a large portion of your portfolio should be in more stable, lower-risk investments that can potentially generate income. But even in retirement, diversification is key to helping you manage risk. At this point in your life, your biggest risk is outliving your assets.

What is a diversified portfolio?

A diversified portfolio often includes three primary asset classes: Investors will determine how much they should dedicate to each asset class based on things like their investment time horizon, investment goal or goals, and risk tolerance.

Can a diversified portfolio reduce market risk?

But even with a well-diversified stock portfolio, an individual is still exposed to market risk (or systematic risk ), which cannot be reduced by adding additional stocks. Below, we discuss the principles of diversification and how investors can build a truly diversified portfolio .