Are You Truly Diversified? A Simple Way to Track Overlap, Allocation & Rebalancing
If two different funds in your account both own the same top 10 stocks, are you diversified? Or just duplicated?
I see this often with pre-retirees: plenty of line items, but most of the money is riding the same wave. The fix isn’t complicated. It’s about seeing through the noise to what you really own and organizing it in the way that makes sense to you.
What diversification really means
Diversification isn’t “own more things.” It’s “own different things that don’t all move together.” That means:
Across asset classes: stocks, bonds, cash, real assets/alternatives.
Within asset classes: company size (large/mid/small), sectors, and geography (U.S. and international).
For bonds: location, duration (short/intermediate) and credit quality.
Fifty positions that behave the same way give you one roller coaster, not a smoother ride.
A note for small business owners: don’t forget your biggest holding
Many owners underestimate how much of their net worth is tied to the business and how correlated it is to their income and local economy. Get a business valuation so you can see that exposure clearly. If there’s a chance your company won’t sell, or won’t sell for what you hope, start diversifying before the exit clock forces your hand.
A comprehensive resource to track what you own
Use the Financial Plan Organizer (linked below) to create a simple “look-through” of your portfolio.
Here are four steps to get started:
Inventory everything
List each account and each holding including account type, ticker/fund name, % of the account, expense ratio, and the account’s job (growth, income, reserve).Spot overlap
Different funds can hold the same companies. Note “% in top 10” or jot a few top holdings. If three funds all lead with the same mega-caps, you’ve got concentration risk.Map your allocation
Roll everything up into four percentages that total 100%:U.S. stocks
International stocks
Bonds
Real assets/alternatives/cash
To get more specific you can track sector and market cap. If small caps or international barely register, you may not be broadly diversified no matter how many positions you own.Track account location
Where you hold each asset matters.Tax-efficient stock index funds often fit well in taxable accounts;
income-heavy or frequently traded pieces may belong in tax-deferred accounts.
Roth can be a home for long-term growth.
The point is to see it clearly so rebalancing and tax decisions are easier.
Maintain diversification without overthinking it
Rebalance with rules. Pick a schedule (annually or semi-annually) or use tolerance bands (e.g., trim or add when an allocation drifts 5 percentage points from target). Consistency beats precision. I wouldn’t recommend rebalancing more than twice a year.
Be tax-smart.
Rebalance inside IRAs/401(k)s first.
Use new contributions and dividends to top up lagging areas.
In taxable accounts, trim positions with smaller gains, harvest losses when appropriate, and
consider charitable gifting of highly appreciated shares.
Watch total risk. Fees, factor tilts, and bond credit/duration can quietly change your risk profile. Review them during your rebalance.
What diversification can and can’t do
Diversification is great at reducing company-specific and sector-specific risk. It doesn’t eliminate market risk. That’s why your allocation, time horizon, and a healthy cash buffer still matter. Especially for pre-retirees who want to stay retired. Consider using the silo strategy that I discussed in my last video about tracking your assets that you can find here.
A Quick Case Study About Diversification
A local business owner nearing retirement discovers that 55% of their net worth sits in the business and 30% of their market portfolio is concentrated in U.S. large-cap tech through multiple funds. After a valuation, they stage liquidity over two years, add international and small-cap exposure, and shift income assets to tax-deferred accounts.
Result: similar expected return, lower concentration risk, and a clearer path to retirement. It doesn’t have to be complicated but you do need to know where you stand.
Don’t get caught walking into retirement like a dark room full of legos on the floor without a flashlight. Request a Financial Plan Organizer to act as your guiding light for retirement.
Use the button below to request your FREE Financial Plan Organizer!
Questions About Diversification
What is real diversification?
Owning assets that don’t all move together. Think about investing across and within asset classes.
How many holdings do I need?
Enough to cover major asset classes, sectors, sizes, and geographies; funds/ETFs can achieve this efficiently if you know what to look for.
How often should I rebalance?
Annually or semi-annually, or when allocations drift ~5% from target. Whatever makes the most sense for your plan but don’t rebalance too often or you will pay more in taxes.
Can I be over-diversified?
Yes, too many overlapping funds adds cost and complexity without reducing risk.
Does diversification prevent losses?
No. It reduces specific risks but can’t remove broad market risk.
Should small business owners do anything different?
Get a business valuation, then build a diversification plan around that exposure.
Use the button below to request your FREE Financial Plan Organizer!
Questions or need help?
Our Fiduciary Mission:
At Integritas Financial, we specialize in helping small business owners navigate the complexities of their financial lives, providing fee-only financial planning services with a fiduciary responsibility. Our mission is to serve as your trusted partner, offering personalized guidance that aligns with your unique goals and the demands of running a business.
We work closely with business owners to address critical financial areas, including business exit strategies, tax planning, retirement planning, asset protection, estate planning, and coordinating with your team of professional advisors. Whether you’re preparing for a business sale, planning for succession, or balancing personal and professional financial priorities, we help you build a comprehensive strategy tailored to your needs.
At Integritas, your financial success is at the heart of everything we do. As a fiduciary firm, we are committed to acting in your best interests, providing transparent advice without the pressure of commissions or product sales. We believe in empowering you to make informed decisions by simplifying complex financial matters and delivering solutions designed to support your long-term prosperity.
Whether you’re in the early stages of growing your business or preparing for a major transition, Integritas Financial is here to help you manage the intersection of business and personal finance with confidence. Let us partner with you to create a roadmap for your success, so you can focus on what you do best—running your business.
Integritas Financial is lead by Ryan Kaysen, a certified financial planner™ based in Charlotte, NC.
The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.
This content not reviewed by FINRA