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Step 1
Know that the broader your investment portfolio, the less vulnerable it is to the ups and downs of individual companies or industries.
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Step 2
Consider investing in mutual funds if you don't have time or money to invest in a broad mix of individual stocks.
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Step 3
Understand that mutual funds generally buy the stocks of many companies, freeing you of the need to keep track of dozens of individual stocks.
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Step 4
Evaluate mutual funds by looking at their total returns over the past three to five years. How do they compare with the market as a whole?
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Step 5
Find out how much the funds charge in annual management fees. The fees will take a toll on your return.
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Step 6
Invest in a mix of mutual funds. Some focus on hot-growth companies, others are more conservative. Some invest in bonds, others buy only stocks.
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Step 7
Choose a mix of investments that matches your goals. If you are 55 and saving for retirement, your goals and your portfolio won't match those of a 22-year-old who is saving for a new boat.
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Step 8
Update your portfolio as your goals change and as the market changes.
