Simply put, we hope to purchase assets that will increase in value and, depending on our situation, how we allocate the percentage of those investments can make or break our retirement and help or hinder our sleep at night.
I'm sure you've heard the expression of not keeping all your eggs in one basket when referring to diversification. The problem is, with many investors that have investment accounts at several institutions or too many mutual funds, they often have a bunch of baskets with the same eggs doing the same things. Or, as Warren Buffet once said, 'put all of your eggs in one basket and watch that basket very, very, closely'. Most people would prefer not to do the latter when it comes to their investments.