One of the cardinal rules of investing is diversification. You never want to put all of your eggs in one basket. Ensuring your portfolio is diversified will make sure you will not lose half of your money in one day.
If you invest no more than 4% of your money in a single investment, and set a stop/loss at 25% for every one, you are guaranteed to never lose more than 1% of your portfolio on said investment. Doing so also means that you have to pick at least twenty different things to invest in. While we’re talking about the stock market, that is not a problem at all. You can easily find a lot of good companies to invest in.
In order to balance your portfolio even more, I recommend allotting between ten and fifteen percent of your portfolio in commodities like gold and oil. Gold and oil tend to go up when the dollar and the market are down. Gold has been breaking records and many analysts predict that it might soon double, triple and maybe even quadruple its current value. Some good names to invest in there are Newmont Mining (NEM:NYSE), Barrick Gold (ABX:NYSE) and Goldcorp (GG:NYSE). The big oil companies, like Exxon-Mobil (XOM:NYSE), Chevron (CVX:NYSE) and ConocoPhillips (COP:NYSE) also have dividends that are nice and steady and good for any portfolio.
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