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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Monday, May 22, 2006

Diversification in Your Stock Portfolio

Whether you are investing for retirement or strictly to make money you need to be diversified. So if you are going to own individual stocks you need to make sure you have your bases covered in industry sectors.

Basic industries
Public utilities
Capital goods
Consumer durables
Consumer non-durables
Consumer services
Health care

To be minimally diversified with stocks you need to have at least 5 stocks and they must represent 5 different industry sectors. By doing this you will not be hurt as much if one sector becomes out of favor.


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