Diversify Your Investments

Don't put all your eggs in one basket.  Make sure you reduce your risk by investing in all different types of assets.  It's okay to have only one or two investments when you're getting started, but once your investment account reaches $10,000 or more, make sure you start adding diversification.  The more money you save, the more you should diversify.

Spread your investments over all of these types of investments:

• large, small and medium companies
• domestic and foreign companies
• technology, health care, energy, retail, transportation and other investment sectors
• real estate (whether through stocks or direct investment)
• stocks, bonds and mutual funds
• high growth and value stocks
• high yield and low risk bonds
• dividend and growth stocks
• think about hedge funds if you have a lot of money (over $1 million)

Even if you have a lot of different investments, make sure that they don't overlap too much. For example, you could own ten different mutual funds but they could all have a big position in the same companies.