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November 7, 2011
Diversify Your Investments

Are all of your investments in one place? Learn how diversifying your holdings can help you ensure your investments are protected.

Transcript

Financial experts agree that diversifying your investments can help protect you in case some of them should underperform or lose value. They also agree that most people's needs–and appetite for risk–change over time, especially as you approach retirement.

That's why many people practice "asset allocation, " where investments are divided among different classes, including stocks, bonds and money market funds.

You can further spread out your risk by investing in mutual funds, which pool money from many investors to buy a broad spectrum of stocks and bonds. So, if one company in the fund plummets in value, the overall impact to your account is lessened.

Bottom line: Understand how your money is invested and make changes as market conditions and your tolerance for risk change.

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