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So, you bought a what??

Updated: Mar 1, 2021

With so much uncertainty in the markets today, many investors are looking for ways to minimize risk and maximize gains. All investments carry some amount of risk, but one proven way to spread that risk over multiple investments is by building a diversified portfolio. Talk to your Certified Financial Planner for help diversifying your growing portfolio and read on for some important tips from Coast to Coast Finance.

Look at some Exchange Traded Funds (ETFs), Mutual Funds, or Index Funds

Sure, you can keep buying individual stocks and hope for the best, or you could take a little shortcut and invest in a Fund instead. Since ETFs and Mutual Funds act as a basket of individual stocks, they can be a great way to instantly diversify your initial investment. It’s important to understand the fees associated with any particular Fund, and you should spend some time reading up on the Prospectus of the Fund and researching what their underlying stocks actually are. Any reputable Fund should have well documented information available to you online, as well as profiles and backgrounds of all the Fund managers. Index Funds are slightly different, as they seek to track a major underlying index like the S&P 500. VOO & SPY are two such Index Funds. If you are unsure which Fund is right for you, speak to your Certified Financial Planner or reach out to if you need help getting in touch with a CFP near you.

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Check out stocks in different sectors

When you are looking at adding individual company stock to your portfolio it’s important to consider stocks across multiple sectors. Energy, Health Care, Financials, Real Estate, Materials, and Consumer Staples are a few examples of big sectors, with numerous sub-sectors and industries in each. A smart investor can minimize risk by adding stocks from companies with different characteristics into their portfolio and not relying too heavily on one sector. For example, investing all your money in Apple (AAPL) & Intel (INTC), both companies in the Technology sector, would not be the most diversified strategy.

Keep a little cash

“I wish I didn’t have so much cash!” said no one, ever. However, most financial professionals will agree that it’s better to invest your extra cash instead of keeping it stashed inside an old shoebox or in your savings account. Still, there is a place for some cash in a diversified portfolio. It could be an emergency fund earning a bit of interest in a high-yield savings account, or it could be sitting in your brokerage account. In either case, it’s important to keep some “peace-of-mind” cash easily accessible, because you never know what might happen in the markets tomorrow.

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Keep growing your portfolio and adjust as necessary

Diversification is not something that happens once; you may need to adjust your holdings depending on market conditions. Meeting regularly with your CFP will be essential to maintain a balanced portfolio. Many finance professionals will advise you to rebalance at least 4 times per year, or once every quarter. Additionally, you should add to your investments on a regular basis. Consistently investing into a well-diversified and professionally managed portfolio has been a proven strategy for building long-term wealth. You may experience ups and downs along the way, but if you stay diligent and follow these tips you will be one step closer to financial freedom!

We’d love to hear about your investing journey! Reach out using the contact box below or email You can also reach us on Facebook, Twitter, Instagram, or LinkedIn @CtoCFinance & @C2CFinance. Happy trading!

Coast to Coast Finance may earn a commission from purchases you make through affiliate links. Coast to Coast Finance does not own a position in any of the stocks or funds mentioned in this article. This article is intended for educational and informational purposes only.

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