What is a diversified stock portfolio?

Diversification is a primary tenet of long-term, intelligent investing. Diversification is the process of spreading your investments across multiple stocks from different industries, sectors, risk profiles, and more. By diversifying, you can lower the overall risk of your portfolio. So how can you build your own diversified stock portfolio?

What is an example of a stock portfolio?

An example of a stock portfolio could be the more traditional 60/40 portfolio, where 60% is allocated to stocks, and 40% is allocated to bonds. Another example of a stock portfolio could be a higher-risk portfolio consisting of over 70% stocks or higher-risk growth-oriented equities.

Why should you diversify your investment portfolio?

For example, when you diversify, you allocate a portion of your investments to riskier stock market trading, which you spread out across different types of stocks and companies. When diversifying, you also put money into safer investments, like bonds or mutual funds, to help balance out your portfolio.

Are gold and oil a good diversified portfolio?

But gold and oil are two great diversified portfolio examples and good places to start when buying commodities. You may already have some fixed-income options depending on your investing goals. For example, if you own dividend stocks, that is one form of fixed income.