Investing Portfolio Strategies: Should I Diversify My Portfolio?

Risk the board game immeasurably differs from financial risk. You do need to play both the stock and the board game wisely. You have to keep close tabs on what you have and what you need to make smart moves and advance to where you want to be.

Merriam-Webster defines the broad term “investment” as “to commit money in order to earn a financial return.” The ways you can go about committing money (or other assets of value) vary widely. Stocks are one primary way of investment. Exchange-traded funds provide alternative investments for those looking for different investment strategies.

You don’t need an expensive financial advisor with an exquisite portfolio to determine if you need to diversify your portfolio. Ten minutes of your time could yield a 10 percent return or higher if you take our non-expert advice. Warren Buffet didn’t make this quiz, but neither did Jimmy Buffett, and that’s gotta count for something, right?

Investing Portfolio Strategies

Investing portfolio strategies differ depending on the investor's profile. Older investors generally take a more risk-averse investment strategy when making moves, since they have a shorter time horizon and more to lose from years of working. An older person or someone on a fixed income may also want more passive income, meaning money works for them in slow-but-steady increments, and they don't have to trade with the frequency or franticness of actively managed funds. Younger investors have a higher risk tolerance, given they have far less to lose and more time to recover the stock market and other asset classes to recuperate losses and grow. You can track stock risk through a stock's best, which is market risk relative to the market portfolio.

A well-diversified portfolio is essential investment advice to growth investors and value investors alike. A well-diversified investment portfolio protects against unsystematic risk and maximizes returns. Some like mutual funds for the secure track record of an elite fund manager and the typical mix of investing instruments. Keep in mind if you invest in stocks, you are essentially taking some ownership of the underlying business. Another asset class you can get into is real estate, which also ties into real estate securities.