Next video:
Loading the player...

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.

  1. No results found.
Related Articles
  1. Investing

    5 Tips For Diversifying Your Portfolio

    A diversified portfolio will protect you in a tough market. Get some solid tips here!
  2. Investing

    Dollar-Cost Averaging Pays

    Get the most out of your mutual fund by using this simple but powerful strategy.
  3. Investing

    Create a Diversified Portfolio With These 3 Steps

    Take these three steps to achieve and maintain diversification in your investment portfolio.
  4. Financial Advisor

    Are You A Disciplined Investor?

    Don't let "financial porn" steer you away from a sensible, long-term approach to investing.
  5. Investing

    Getting Started In Stocks

    We'll provide a step-by-step introduction on how to invest - and succeed - in this market.
  6. Investing

    Update Your Investment Plan With These 3 Steps

    Periodically updating your investment plan helps keep you on track to achieving your long-term goals. Here are three key areas to review.
  7. Investing

    Start Investing With Just $100

    Robo-advising is a good way to start investing and take advantage of compounding interest.
  8. Investing

    Introduction to Investment Diversification

    Reducing risk and increasing returns in your portfolio is all about finding the right balance.
  9. Financial Advisor

    4 Steps to Building a Profitable Portfolio

    This is a step-by-step approach to determining, achieving and maintaining optimal asset allocation.
  10. Investing

    Hot or Not: Single Stocks in Your Portfolio

    It can be rewarding to invest in well-performing companies, but single stocks can present some downside for your portfolio, too. Here's why.
Hot Definitions
  1. Money Market

    A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. ...
  2. Block (Bitcoin Block)

    Blocks are files where data pertaining to the Bitcoin network is permanently recorded.
  3. Fintech

    Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century.
  4. Ex-Dividend

    A classification of trading shares when a declared dividend belongs to the seller rather than the buyer. A stock will be ...
  5. Debt Security

    Any debt instrument that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount ...
  6. Taxable Income

    Taxable income is described as gross income or adjusted gross income minus any deductions, exemptions or other adjustments ...
Trading Center