You deserve to retire wealthier

Diversify your investments Diversification is a fancy way of saying don’t put all your eggs in one basket. Because the more diversified your investments (the more baskets they’re in), the better your portfolio should perform over the long term. Why does this work? Because there isn’t one industry or asset class that consistently performs over time. So, you’ll want to ensure that your portfolio isn’t overwhelmingly reliant on one particular industry. Diversification aims to mitigate risk and increase chances of long-term growth by investing in a wide variety of assets and sectors instead of focusing heavily on one area or company.

Know your comfort with risk When it comes to investing, you need to know how comfortable you are with big swings in the market. If you can’t stomach 20% swings in your portfolio, you will probably be a more conservative investor. The way you balance your comfort level is maintaining the proper balance of fixed income investments and equity investments in your portfolio.

Fixed income is an investment where you can reasonably expect regular periodic income, similar to interest in a savings account. These investments will give you a lower return than equities but also a limited downside. They are generally better for people who are closer to retirement age.

Equity is what people usually think of when they think of investing, usually stocks and exchange-traded funds. Equity investments can give you higher returns but also a bigger risk of downside. Equities are more acceptable for people who have more time until retirement.

Portfolios holding more fixed income are usually more conservative, where portfolios with a greater amount of equity are riskier.

Time horizon Many people think investing for retirement is simply waiting to get to a certain number, but you don’t stop investing the day you retire. Quite the opposite. When the day comes and you’re ready to enjoy your golden years, the money you saved will turn into income for your retirement lifestyle. But you won’t need all the money all at once. Odds are, you will still be investing a portion of your wealth even in retirement. So when you’re looking at how long your investments will stay invested, you should look at the amount of time you will spend retired on top of the amount of time it’ll take for you to get there. This will give you a bigger picture of how long your investments will stay in the market and the impact of those investments over time.