Biggest Investor Mistakes: iPonzi, Anyone?

By Ben Steverman - 2011-09-13T22:48:05Z

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Extreme Diversification

Investors can take wise advice to extremes, says Sheryl Garrett. One client was updating a monthly spreadsheet to track 20 brokerage accounts, funds, bank deposits, and other holdings, each with its own fees. "Don't put all your eggs in one basket" was her explanation, which Garrett calls a "wonderful concept, wrongly applied. Simplification is actually safer and more secure." Another client had 19 bank accounts, each earmarked for a different purpose, from Christmas gifts to her car. "Her idea of safety was having a lot of cash," says Garrett, who showed her that moving some money to certificates of deposit and short-term bonds would get her an extra 1 percent in yield.