05.20.11

Many individual investors can’t tolerate the short-term fluctuations in the stock market. Diversifying your portfolio is the best way to smooth out the ride.

Diversification is a risk-management technique that mixes a wide variety of investments within a portfolio in order to minimize the impact that any one security will have on the overall performance of the portfolio.
Diversification lowers the risk of your portfolio. Academics have complex formulas to demonstrate how this works, but we can explain it clearly with an example: 
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