Long-term investing requires a serious commitment, and you’ll probably want to minimize risks along the way. Perhaps the biggest risk of all is losing money on your investments. So how do you deal with that? For starters, just heed the age-old advice of not putting all your eggs in one basket, a practice called diversification. We put together this brief guide to show you what diversification is, how to go about it, and how it can benefit you.
Putting together your own stock portfolio versus buying ETFs/funds both have their advantages and disadvantages. However, most retail investors likely won’t be able to compile a portfolio that consistently outperforms the wider market. The biggest risk is picking the wrong stocks. The table here shows the performance of the NASDAQ index (easily available in the form of an ETF) versus a few randomly selected stocks that are part of the index.