After you decide on an asset allocation, the next step is to diversify
your money within the different investment classes.
By putting your money in several different investments, you “spread
the risk.” To illustrate: rather than invest in one stock, you
might invest in a variety of stocks. That way, if one stock performs
poorly, it represents a smaller portion of your overall stock portfolio.
Before you can set an asset allocation and diversify your investments,
you need to know more about the choices that are available.
Following is a brief overview of the basic investment choices.