SAN ANTONIO – If you’re looking to reduce your investment risk, you may want to consider diversifying your portfolio.
The U.S. Securities and Exchange Commission says one way to diversify is to put your investments among different kinds of assets and industries. That means don’t put all your eggs in one basket.
The SEC says holding a number of different stocks or bonds and investing in different industries, such as technology or health care, can also make you diversified.
If one stock isn’t doing so hot in one industry, it may offset any losses on other investments in a different industry. Basically, if you lose some eggs in one basket, you may still be OK if you gain some in another basket.
Some investors may diversify by buying mutual funds, which pool money from many people and invest those funds in stocks, bonds or other financial products.
There are some mutual funds that can invest in hundreds or even thousands of tradeable assets at once, which can help with reducing your risk.
Remember: more investments may lead to additional fees, which will lower what you make, so it’s best to consider all the costs when deciding how you’ll diversify.
For tips from the SEC, click here.