ETFs, as long as they are low-cost and well-diversified, are a great way to build your smart investment portfolio. 2024, like many years before, showed that you need to spread your eggs over many baskets and that individual stocks can be a minefield.
Diversification in investing is a strategy that involves spreading your investments across various asset titles to reduce risk. The idea is that by holding a mix of different types of investments, such as stocks, bonds, real estate, and other assets, you can minimise the impact of any single investment’s poor performance on your overall portfolio. Think of it as not putting all your eggs in one basket. By spreading your investments, you can better manage risk and increase the potential for stable returns in the long run.
Spreading your money over assets, countries, sectors, and stocks (called diversification in Finance) has several advantages:
Risk reduction: By investing in different assets, you spread risk and reduce the impact of poor performance in any single investment.
Increased likelihood of positive returns: Diversification increases the chances that some of your investments will do well even when others don’t.
Minimising volatility: A diversified portfolio helps reduce your investments’ overall up and down swings (volatility).
So, how did this work out in 2024? Let’s examine the performance map below, which shows the different returns of assets over the last 25 years.

Gold (and Crypto) and America (S&P 500 index) were the clear winners of 2024, so not having America would have made your portfolio underperform compared to the average global investor. The average markets outside the US, called EAFE, the green box, didn’t do so well.
Let’s dig into America a bit more. Which stocks have driven the S&P 500 index higher? See the chart below (Statista).

If you had missed Nvidea, you would have missed 22.4% of the US performance! Not owning Apple would have missed 7.4% of the fun. Amazon and Meta would have spoiled the party by nearly 6% each. This is why the average active equity fund with a US or Global focus has underperformed the index again (they do that on average 9/10 years over the last 25 years).
Also, look carefully at the losers—their impact on the index’s total return is so low. The benefits of diversification at work in real life; no way the losses of individual stocks would have been so limited when you had a portfolio of only 10 stocks.
Investing in a well-diversified index ETF ensures that you (a) capture all the winners and (b) limit your exposure to any single loser. This strategy minimizes the risk of missing out on top performers while avoiding excessive losses from underperformers. Over time, this approach makes a significant difference. The compounded effects of consistently capturing winners and avoiding heavy losses, combined with lower costs and taxes, will ensure that, year after year, you will rank among the top 10% of investors.
So, how do you ensure you don’t miss out on the winners in 2025? Simply invest in quality ETFs! How do I find them? Read my book and/or sign up for a course.
Gold (and Crypto) and the S&P 500 index were the winners of 2024, making them essential additions to your portfolio for optimal performance. Not having exposure to the US market would have resulted in underperformance compared to the average global investor. To ensure you don’t miss out on these winners, consider investing in quality ETFs. For more guidance on finding these ETFs, you can read my book and/or enroll in my investment course.