How to Diversify Your Investments

If you keep all your money in the stock options of your company, what happens is that you have a number of possibilities where you become a millionaire or maybe even a billionaire. Conversely, if you take off of your stock options and you invest them, and you find some way to diversify them with an index fund,. You reduce your average expected returns. But the distribution of those returns is such that almost certainly you will end up a millionaire. If two of the stocks go bankrupt and you need money for a medical procedure, you're cooked. And so again, I think it's important to keep into mind those different examples.