Earn Rewards: Sign up now and earn a special reward after your first deposit. See offer details

<title>Dismiss</title>

Betterment

Save, invest, retire

GET — On the App Store

View
<title>Dismiss</title>
Loading

Quiz: Do You Understand Diversification?

Research shows most people don’t understand how much diversifying their investments impacts their performance. We’ve created a quiz for you to see how much you know about investment diversification.

Articles by Dan Egan
By Dan Egan Managing Director of Behavioral Finance & Investing, Betterment Published Oct. 22, 2015
Published Oct. 22, 2015
1 min read
  • Academic research has shown that investors don’t understand diversification's impact on volatility and expected returns.

  • As a result, many investors are dissatisfied with a diversified portfolio, or aren’t properly diversified.

  • Take our quiz to find out if you know how diversification improves performance.

Do you understand what diversification does for your portfolio?

Research shows that most people don’t. A University of Colorado Boulder study found that 90% of people who took a survey on diversification answered at least half of the questions incorrectly.

We want to give you an opportunity to show what you know, so we created the quiz below. Once you take it, we’ll show you how you’ve done compared to other people.

Don’t feel bad if you don’t get a perfect score; the concept of diversification is confusing, and most people get at least one or two questions wrong. While people generally know diversification is a good thing, they’re often not sure exactly how or why.

If you’d like to read more on the research, read the original paper.

More from Betterment:

Recommended Content

View All Resources

Reducing Your Biggest Retirement Expense: Where You Live

You’ll probably want to retire somewhere different than where you live right now. Let’s make that part of your retirement plan.

Compound Interest Can Help Make You Rich

Don’t miss out on one of the most powerful tools you have at your fingertips.

Assessing a Portfolio’s Diversification

Guidance on diversification to help you make portfolio changes, knowing the potential impact to the future performance of your investments.

How would you like to get started?

Manage spending with Checking

Checking with a Visa® debit card for your daily spending.

Save cash and earn interest

Grow your cash savings for general use for upcoming expenses.

Invest for a long-term goal

Build wealth or plan for your next big purchase.

Invest for retirement

Set up traditional, Roth, or SEP IRAs to save for the golden years.

See details and disclosure for Betterment's articles and FAQs.