Developed in 1952 by Harry Markowitz, the Modern Portfolio Theory (MPT) is premised on the notion that portfolio returns can be maximized by spreading risk across many different investments. With an estimated $7 trillion in institutional assets currently invested in accordance with the methodologies of MPT, it continues to be one of the most important and effective strategies of modern investing for both institutional and retail investors alike.
Any financial planner will attest that diversification has become a fundamental component of nearly every retirement portfolio. Some would even argue that having a properly diversified retirement portfolio is about as crucial as possessing retirement savings at all.
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