Smart investors don’t put all their investment eggs in one basket. Instead, they put money into a mix of different baskets when trying to … hatch some profits.
When your chances of success or failure are spread out across investment categories, you’ve got a diversified investment portfolio — and that’s just what you want. You can diversify by:
- Using both bond- and equity-based investments
- Mixing in some long- and some short-term bonds
- Considering commodities, real estate, and corporate stocks
- Trying some homegrown stocks and some international stocks
- Balancing small, mid-sized, and large company stocks
Tweaking your mix over time is one way to manage risk. Want to go conservative? Put more into less risky investments. Feeling aggressive? Put more into higher risk categories. You can also shift your mix as your goals, timeframes, or risk tolerance change. Think about your event horizon, and make changes accordingly.
But whatever you do, keep that portfolio diversified, keep your eyes on the big picture, and stay invested.