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• Consider stock options to mitigate risk. (We will cover options next.)
• Don’t over-diversify. As good as diversification is, there comes a point where it is no longer serving the objective. By overdiversifying, your portfolio is spread too thin, requiring more time to manage, more money to pay towards commissions, and it becomes more prone to mistakes. Excessive diversification is perhaps no better than no diversification at all. As a guide, a portfolio of about 10 reputable stocks (including some blue chips) from various industries should suffice. Throw in a couple of high-risk stocks to spice it up, if you like a little dabbling. Investing in stocks is like nutrition. A balanced diet is the best way to keep the body and mind healthy. A well diversified portfolio would do the same for your investment returns. Moderation is key.

Brokerage Firms

So you are ready to start investing. Where can you turn? A brokerage firm, of course. Even if you wanted to start a DRIP account (which does away with using a broker), you would still need to use a broker for that initial share you are required to have. Today there are plenty of brokerage firms to choose from. Most fall within one of these three categories:

Full Service Broker — With a full service broker you are assigned a live broker you can actually interact with. Your broker is there to guide you with your investment decisions and warn you about potential hazards. Full service brokers are there for you, so you can call them anytime to get advice or just simply place orders. Full service brokers usually have access to a vast amount of financial data in real time and …