Buying Stocks For a Balanced Portfolio-2009

Buying stocks is seven of the most popular investment activities for those people who are interested in building their wealth and future financial security. Unfortunately, as they have seen over the last year or so, stock prices can plummet without warning, and wealth and retirement investments can vanish in the blink of an eye. Because of this, those who own stock are encouraged to diversify their investment holdings to secure a balanced portfolio.

Diversification of your portfolio - with less of reliance on buying stocks, and more on stable, low-risk investments - is an important part of every serious investor's strategy. Whether you are investing to let your excess funds work for you and increase your wealth, or to build a secure retirement fund, there is small doubt that you have no interest in losing your funds. In fact, chances are that you are relying on that investment funds - and the hoped-for return - to fund at least some portion of your future.

Every investor knows that buying stocks can be a heady proposition. Fortunes can be made and lost as the companies you select can either rise to the top of the economic ladder or slide down the chute of failure and bankruptcy. Sometimes it is hard to select which companies are worthy of investment, and every buy can sometimes feel like a roll of the roulette wheel - especially in times like these when the stock market is suffering the upheavals of uncertainty.

The bottom line is that buying stocks without other safe investments to balance out your portfolio is an inherently unsafe strategy that gives even professional investors pause. To provide the most security and stability to your investment wealth, diversifying your portfolio is a must.

In addition to buying stocks, funds market mutual funds are a preferred low risk option for lots of investors. Unlike ordinary mutual funds, which can be every bit as unpredictable as the stock market, funds market mutual funds are tied to securities that pay a fixed amount for a set duration of time. Another option lots of investors select is to buy bonds, certificates of deposit, or both. They both offer protections that stocks basically cannot match, though both offer lower return on investment than stock shares. Even if the company goes under, you will either be ensured a place in the line of creditors being repaid, or be reimbursed by the government.

By Jeff C Daniels