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You can never be sure of what the market will do at any given moment. That’s why a well-diversified portfolio is so important. These five steps can help you create one.

First, spread the wealth. Equities are great, but you can’t put all of your investments into one stock or sector. Create your own virtual mutual fund by investing in a combination of companies you know and trust.

Next, consider index or bond funds. Securities that track an index can be a valuable long-term diversification instrument for a portfolio. And fixed-income investments hedge against volatility and uncertainty.

Third is to keep building. Regularly add to your investment through techniques like dollar-cost averaging, which will invest a fixed amount on a regular schedule. Dollar-cost averaging minimizes the risks of putting a large amount into a single investment at the wrong time.

Fourth is know when to get out. Don’t put your investments on autopilot and ignore what they’re doing. Monitor the market, and keep up with the companies you invest in.

And last, keep a watchful eye on commissions. Be aware of what you’re paying, and to whom. Commissions reduce returns, but the cheapest choice is not always the best.

The bottom line is careful investing can be fun and rewarding. Use a diversified approach to help your investments grow.

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