Investing often invokes fear. No one wants to make a costly
mistake, especially when the stakes are high – as they are
for retirement savings.
That's why a cardinal rule when it comes to successful
investing is to diversify your portfolio.
When you diversify your investments, you're managing
downside risk by spreading a pool of money across different types
of asset classes (stocks, bonds, cash-equivalents, commodities) as
well as different types of securities within those asset classes
(Canadian dividend stocks, small-cap technology stocks, global
corporate bonds, etc.).
DIVERSIFICATION HELPS MANAGE RISK
Not even the smartest stock market strategists can predict where
the markets are headed. Sure, anyone can make the right calls
occasionally, but there are lots of factors that can affect the
performance of assets – most of which we can't possibly
foresee.
