Don’t Put All Your Eggs in One Basket—Literally and Financially
Recently, I saw a viral YouTube video that showed a chaotic scene at Costco: people rushing to grab eggs like they were scarce treasure. One person loaded every last carton into their shopping cart, leaving others empty-handed. They literally put all the eggs in one basket.
Now imagine this: they push that overloaded cart through the parking lot, hit a speed bump—and disaster strikes. Dozens of eggs crash to the ground in a messy, irreversible loss. That image stuck with me—not just as a shopper, but as an investor.
Because in the world of investing, one poorly timed bump can do the same to your wealth if it's not protected through diversification and regular rebalancing.
Why Diversification Matters in Investing
Diversification is the practice of spreading your investments across different asset classes like stocks, bonds, real estate, crypto, commodities, and cash. It’s your best defense against market volatility. When one asset underperforms, others might rise or remain stable, helping you minimize risk and smooth out your returns.
It’s like shopping smart at the grocery store. You wouldn’t buy only eggs for the week—you’d mix in vegetables, grains, fruits, and maybe a few guilty pleasures. Likewise, a balanced portfolio is healthier for your financial future.
But Diversification Alone Isn’t Enough
Over time, some assets in your portfolio will grow faster than others. For example, your tech stocks might soar while your bond holdings stay flat. If left unchecked, your asset allocation drifts away from your original strategy, making your portfolio riskier than intended.
This is where rebalancing comes in.
What Is Rebalancing and Why Should You Do It?
Rebalancing is the act of adjusting your portfolio to restore your original asset mix. If your target was 60% stocks and 40% bonds, but now stocks make up 75% of your portfolio, it’s time to trim those gains and reallocate funds back into bonds or other underweight areas like cash or commodities.
There are two common ways to approach rebalancing:
- Time-based rebalancing: Reassess and adjust your portfolio on a set schedule—quarterly or annually are the most common choices.
- Threshold-based rebalancing: Rebalance when any asset class drifts more than a certain percentage (e.g., 5%) from its target allocation.
One of my friends even rebalances once a year—on their birthday. It’s a personal, easy-to-remember ritual that keeps them consistent. What about you? When would rebalancing fit naturally into your life?
Rebalancing helps ensure you’re not unknowingly taking on too much risk—and encourages a disciplined approach to buying low and selling high.
Want to Automate It? Fidelity and Other Robo-Advisors Can Help
If manual rebalancing feels like too much work, you're not alone. Fortunately, many investment platforms offer automated rebalancing as part of their core services. Personally, I use Fidelity Go, which automatically keeps my portfolio aligned with my risk profile and goals—no spreadsheets or guesswork needed.
Other platforms like Betterment, Wealthfront, Charles Schwab Intelligent Portfolios, SoFi Invest, and Vanguard Digital Advisor also offer automated rebalancing features that work in the background based on your chosen asset allocation.
These services are perfect for investors who want to stay diversified and disciplined without having to constantly rebalance on their own. Whether you’re a beginner or just prefer a more hands-off approach, automated rebalancing can save time and reduce stress.
The Psychology Behind Rebalancing
It’s tempting to let your winners run. Selling top-performing assets can feel counterintuitive. But successful investing often means doing what feels uncomfortable. Rebalancing forces you to take profits, avoid overexposure, and stick to your long-term strategy.
It’s also a great emotional buffer. Instead of reacting to headlines and hype, you act based on a strategy. And over time, this habit trains you to think more like an investor and less like a speculator.
Egg Prices Will Fall. Markets Will Rise and Fall Too.
Markets are cyclical. Eggs won’t always be $10 a dozen, and tech stocks won’t rise forever. That’s why both diversification and rebalancing are critical. They help you protect your hard-earned wealth and stay focused on long-term growth—even when the world feels chaotic.
So the next time someone tells you, “Don’t put all your eggs in one basket,” remember that it's not just an old saying—it’s a golden rule for surviving both grocery store stampedes and market turbulence.
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