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Author: Kapitalanleger One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35345  
Subject: Re: Diversification in Fixed Income Investments Date: 7/20/2010 3:30 AM
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The real question may be to what purpose are you diversifying? What is the end goal or gain that you are possibly seeking by diversifying?

If you are seeking greater than current CD returns while trying to minimize capital risk then we are into many completely different strategies. As soon as you step away from "risk free assets" then you need to devise some way to determine how much risk you are willing to take on, what kinds of risks you are willing to take on and how you plan on mitigating those risks.

If the CD ladder has a strong probability of doing what you need it to do then no further diversification is needed. A ladder is diversified across time.


Thank you very much for the two replies.

For this portion of my retirement portfolio, I don't want to take on any risk. For risk-free investments, however, I thought that some probably perform better at particular times and others at other times and that was a reason to diversify. (And CDs seem now to have low interest rates.)

From the replies, it sounds like there is no reason for me to go beyond the CD ladder.
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