If you want to be a solid investor you will find that you need one critical component. That
component is a diversified portfolio. Diversified portfolios help ensure that you will have balance
and risk management considerations in place for your portfolio. Experienced investors and
financial advisors have discovered the significant importance of diversification for increasing
financial gain and reducing loss. The concept is simple. You need to have a well rounded
portfolio that has a variety of high risk to low risk investments. That way, if one does great you
are ahead. On the other hand, if one does not go great you are not behind. The three main
categories of investments you need to balance out in your portfolio are cash, stocks, and bonds.
Diversifying these three things in your portfolio will make it strong and give it the best chances of
working effectively for you.