What’s the biggest lesson investors should take away from 2013?
MICHELLE PERRY HIGGINS: The lesson is that diversification does matter and to think otherwise is foolish. Even though the Dow Jones Industrial Average and the S&P 500 continue to blow through historical highs, establishing and maintaining a defensive barrier (i.e., fixed income) is still critical in a well-managed portfolio.
Yes, I understand it may sometimes be tempting to put all your eggs in one basket after this year’s performance in the equity markets, especially domestic. However, without a crystal ball it is impossible to guess which asset class will lead the race in 2014.
Michelle Perry Higgins (@RetirementMPH) is a financial planner and principal at California Financial Advisors.