BMO Financial Group

BMO Financial Group

May 30, 2012 09:17 ET

BMO Financial Tip of the Week: Have a Well Diversified Investment Portfolio

TORONTO, ONTARIO--(Marketwire - May 30, 2012) - As part of BMO Financial Group's ongoing commitment to financial literacy and 'Making Money Make Sense' for Canadians, BMO is releasing a financial tip every week in 2012.

BMO's Financial Tip of the Week:

To stay on track to reach your financial goals, keep a well-diversified investment portfolio

A diversified portfolio - one with a mix of investments spread across several sectors - reduces volatility without lowering expected returns.

"In order to get the most from your money, your investments must be well-diversified and properly aligned with your financial goals," said Serge Pépin, Vice President, Investment Strategy, BMO Global Asset Management. "In today's unpredictable market, it's crucial to balance your portfolio with a mix of investments. A financial professional can help you identify adjustments that will mitigate risk and make your portfolio less susceptible to market fluctuations."

BMO offers the following advice on maintaining a well diversified investment portfolio:

1. Establish your investment goals: Develop a financial plan (either on your own or working with a financial professional) that charts your goals and timeframes (for example: saving for a wedding, a home, retirement, etc). This will help you structure your investment portfolio and keep you on track.

2. Make sure your portfolio has a variety of different kinds of investments: Having lots of investments does not ensure you have a diversified portfolio; however, having a variety of different kinds of investments does. Balance risk and return by including stocks, mutual funds, exchange traded funds, guaranteed investment certificates, bonds and/or cash.

3. Diversify within investment categories: Make sure you have more than one holding for each investment type. For example, for your stock holdings, select 10-30 stocks that cover a range of industries, such as financials, utilities, technology and healthcare. This should provide diversification while reducing risk.

4. Review your investments periodically: Regularly review your portfolio to ensure it remains well diversified and on track to meet your financial goals. Should you need it, seek out the assistance of a financial professional as well.

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