BMO Financial Group

BMO Financial Group

November 16, 2012 08:00 ET

Financial Literacy Month-BMO's Tip of the Day: Have a Well Diversified Investment Portfolio

TORONTO, ONTARIO--(Marketwire - Nov. 16, 2012) - To mark Financial Literacy Month, BMO Financial Group is releasing a series of financial tips throughout November. As part of BMO's commitment to 'Making Money Make Sense', the tips are designed to help individuals and families save and manage their day-to-day finances more effectively.

BMO's Tip of the Day: 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; 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.

"CFEE commends BMO's ongoing efforts to support Financial Literacy in Canada and promote ways in which Canadians can increase their competence and confidence when managing their personal finances on a day-to-day basis," said Gary Rabbior, President, Canadian Foundation for Economic Education (CFEE).

BMO Financial Literacy Month Tips

November 1: Maximizing TFSA investments annually over 20 years can save nearly $30,000 in taxes.

November 2: Utilize rewards to squeeze the most value out of every dollar you spend this holiday season.

November 3: Choose an investment advisor who is right for you and will help you meet your financial goals.

November 4: Use your RRSP to help make the down payment on your first home.

November 5: Space out payments to avoid cash-flow problems.

November 6: Take advantage of the benefits of preferred shares.

November 7: Consider investing in a Registered Retirement Savings Plan (RRSP) and taking advantage of tax incentives when saving for retirement.

November 8: Take advantage of Canada's numerous online personal finance resources.

November 9: Before you head off on your winter vacation, be sure you and your family are properly covered in the event of a medical emergency.

November 10: Understand what you can hold in your RRSP.

November 11: Stick to the one-third rule when planning the purchase of a home.

November 12: Secure your retirement by opening a Registered Retirement Savings Plan (RRSP) as early as possible and contribute to it on a regular basis.

November 13: As couples prepare for their wedding day, they should have "The Financial Talk" to help the transition from "my money" to "our money."

November 14: Using a combination of a credit card, debit card and cash will give you convenience, security and flexibility when you travel or shop in the United States.

November 15: Give the gift of securities and benefit from tax savings.

For more on financial literacy, Canadians can visit the Government of Canada's Financial Literacy Month website, as well as BMO's Financial Literacy online resource.

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at July 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.

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