Asset Classes: How They Work & What They Do
Before you begin investing, you first need to decide how much to invest among the three asset classes: cash, bonds or stocks. Find out how they work and what they do here.

How Should I Allocate My Assets?
One of the best ways to get the most out of your investments is knowing how to allocate your assets. Use this questionnaire and calculator to determine the most profitable course for you.

The Perfect Portfolio Allocation
One of the keys to reduce the stock market’s influence on your portfolio’s performance is to pay attention to what I call the 60-30-10 mix.

Five Things To Know About Asset Allocation
Learn how to create an asset allocation strategy that works for you.

Risk Tolerance Calculator
Knowing how much risk your portfolio can handle is key to successful investing, and it's different for everyone. Use this risk calculator and questionnaire to keep from getting in over your head.

The Dangers of Excessive Diversification
Spreading your assets too thin can hurt your portfolio’s performance.

Beginners' Guide to Asset Allocation, Diversification, and Rebalancing
A great primer for new investors on the importance of proper asset allocation.

After 33 years as an active investor, one thing still surprises me: the amount of shallow and misleading information that passes for financial advice.

The mouthpieces change, but there always seems to be plenty of self-anointed gurus eager to push ill-considered theories on the public.  I’ve made my share of mistakes, too.  But I like to believe I’ve learned something from them.  One of the biggest truths that I’ve found to have stood the test of time is:

Diversification is good, but you don’t need to own everything!

I’m astounded at the bravado of some advisors who say you can build an adequately diversified portfolio with only six or eight stocks.  I would never trust my financial future to just a halfdozen CEOs, however capable or honest.  People come and go.  Businesses run into sudden difficulties that no outside investor could foresee.

Every academic study on the subject has concluded that you need at least 20 stocks to insulate yourself adequately from a blow-up at any single company.  In fact, researchers have recently found that the optimum number is more like 40 to 60.  On the other hand, it isn’t necessary to bet on every pony in the field. 

Seven years ago, the shrewdest players had zero or near-zero exposure to Internet stocks.  Instead, they were heavily weighted (far above what the market indexes would call for) in “stodgy” Old Economy businesses like real estate.  When the Internet issues crashed, real estate soared. Spread your risk, by all means, but only far enough to ensure that each investment brings unique value to your portfolio.

This is just one thing smart investors can do to make—or save—a pretty penny.  Here are five more profit principles to follow:

1. Harness the power of compounding.
2. Owners get richer than lenders.
3. Focus on value, not the news headlines.
4. Quality trumps a “good story.”
5. Know your time frame.