Balancing Your Potential Risks and Rewards

An investment strategy is key in limiting your financial risk. It's recommended that you spread your wealth out across a variety of investments, something known as portfolio diversification. If you're already an investor, you know that market conditions change over time and some investments in your portfolio will outperform others.

Two ways to diversify

You can spread your investment funds across and within asset classes to make sure you are well diversified.

How do you decide where to diversify?

Your level of risk tolerance and the amount of time you have before you need the money will help you decide what percentage of your portfolio to assign to each asset class. Depending on your age, risk tolerance and your other assets, your investor profile might be described as aggressive, moderate or conservative or someplace in between.

Only you can decide which options to choose and how much you spread your money around. With a diversified mix of investments, you may be better able to ride out the downs of economic cycles and limit the risk to your investment portfolio while seeking the growth you want.

Diversification and asset allocation do not assure a profit or prevent a loss in a down market.

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