4 Cornerstones Of Diversification
Published Wednesday, December 31, 1969 at: 2:00 PM EST
How can you balance the quest for investment rewards against the potential risks? Part of this involves your personal comfort level and your investing timetable. Invest too conservatively early in your career or too aggressively late in life and you might fall short of your objectives.
But diversification is the chief tool of this balancing act. It can help you reduce the risks of your portfolio while still pursuing rewards by spreading out your investments over several kinds of assets—an approach that also may lessen the impact of the ups and downs of volatile markets. (Of course, diversification doesn't ensure a profit or guarantee protection against a loss, especially in a declining market.)
There are numerous ways to diversify within a portfolio, but you can build a basic framework on these four cornerstones:
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