The Stock Market Can Be A Scary Place

1113 WordsDec 2, 20155 Pages
The stock market can be a scary place, especially for those who have little knowledge of how stocks work or how to invest their money. Even before the crash of the market, many were reluctant to invest their life savings in a stock that fluctuates in value, with fear of losing everything they’ve worked for. Although analyst look to pin point trends and predict the future valuation of stocks, no one person can predict the day to day performance of a stock or investment fund. One tactic that financial planners and investment advisors use to try to combat the risk of the market is an investment method called diversification. Simply put, diversification is the use of multiple types of investments in your portfolio, exposing you to the different risk/returns that each type of investment offers (Business Dictionary, 2015). On a broad scale, this could mean allocating a portion of the funds in your portfolio to stocks, while investing another portion in real estate investments, and yet another portion in commodity funds. Furthermore, diversification can also include the country in which the investments you’re utilizing are held. A diversified portfolio may hold some U.S. stocks and bonds, while also holding a position in international markets securities and bonds. The underlying purpose of diversification is to minimize the risk of losing money by investing in just one or two funds. By spreading out your profile to multiple types and styles of investments, if done correctly, you

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