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:
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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.
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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.
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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.
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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).