Never Diversified

My father gave me $200 worth of shares of stock some 20 years ago. I reinvested the dividends in additional shares of stock. The stock took a big dive six years ago and has recovered only a little. My shares are worth $9,000. Still, I haven't diversified. Why? Because my father gave me the shares? Because I'm afraid I'll fail? Because I'm too busy? I believe I don't know enough about investing and don't have time to keep up with it. This is my dumbest investment.

— J.L.T., Moore, Okla.

The Fool Responds: May all our dumbest investments be this profitable. You may not realize it, but you earned roughly a 21 percent average annual return, which is terrific and hard to beat. You're right that it would have been smart to diversify, as the shares may well have really tanked on you. If you don't have time, a simple way to diversify is to just buy into a broad-market index fund, such as Vanguard's S&P 500 Index fund. If you have a little time and interest, you can learn a lot about investing at www.Fool.com.

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