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Q: What does “diversified investing” mean?

Photograph of 30 eggs (one broken) in a flat. Diana says...
It’s a means of reducing risk when investing—in other words, not putting all of your eggs in one basket. Having a mix of the Big Three—cash, stocks, bonds—is considered the safest investment strategy, but most novice investors don’t have the money, time or experience to choose and invest among the three investment classes. For them, mutual funds can be considered a good starting point—they’re professionally managed, and there are countless funds to choose from that offer a double whammy of stocks and bonds. Your age, income and risk tolerance all come into play when deciding on the right investment mix for you.

Diana Cawfield is an award-winning financial writer with more than 10 years experience. Send her your questions here.