Want to protect your money? Diversify your investments

Diversifying investments is crucial to avoid financial risk. A key strategy involves balancing stocks, representing company ownership with potential growth, and bonds, which are government or corporate contracts offering more predictable returns through interest payments. The rule of 120 (120 minus your age) can serve as a starting point to determine your stock allocation. As retirement nears, shifting towards bonds and cash provides stability. Diversification also includes investing in international stocks, offering exposure to different sectors and economies, though the necessity of this is debated. Additional diversification can be achieved through small and mid-cap stocks, REITs, and commodities like gold, but simplicity in strategy is emphasized to avoid errors.