Simple Truths About Money

2. Saving, investing, diversifying, and rebalancing lead to financial success.

Invest your savings into a diversified portfolio of stocks, bonds, and cash. The portion invested in each category will depend upon your personal circumstances, risk tolerance and time frame. Review the portfolio on an annual basis to see if percentages in each category have remained stable, if not, sell the category that has gone up and buy the category that has gone down, or add money to the category that has gone down to rebalance back to the original percentages.

As you get closer to retirement and then are in retirement, you will want to adjust the percentages to a higher percentage of bonds and cash.

This is a very simplified version of an investment strategy that works. All that it takes is discipline or a good investment advisor.

Resources: Asset Allocation, 4th Ed., by Roger C. Gibson
Its Your Money Blog

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