An Investor’s Best Friends

Any investor would do well to call on three friends during the course of his or her financial life: diversification, patience, and consis­tency. Regardless of how the markets perform, these practices should be a part of your investment philosophy.

Diversification: a key to safe investing

The saying “Don’t put all your eggs in one basket” has real value when it comes to investing. In a bear market, certain asset classes may perform better than others. The same goes for a bull market. If your assets are held mostly in one kind of investment (say, mostly in mutual funds or CDs or money market accounts), you could be hit hard by stock market losses, or alternately lose out on potential gains that other kinds of investments may be experiencing. So there is an opportunity cost as well as risk.

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