We make little decisions every day, and each has a different effect on our lives. Our day-to-day choices keep us busy because they happen every day. What should I make for dinner? Do I go to the concert Saturday night? Should I save this money or go on a much-needed vacation?
Investing is long-term thinking and preparation for a better (and hopefully wealthier) future. The earlier you start, the more time your money has to mature. Think of a tree. It takes time for a tree to grow big and strong enough to produce healthy fruit. Just like the tree, your investments need time to develop. There may be years of slow growth, huge and surprising bursts, or it can look alarming at times. But by building a diverse portfolio, you are giving yourself, or a loved one more security, flexibility, and freedom in the future.
Investing has the opportunity to make you more than saving because you're not just putting your money into a digital piggy bank. By investing, you own a piece of a company which may make things that can make it more valuable over time. As a shareholder, you support the company and can benefit from its growth over time. Of course, the sooner you begin, the better, but it's never the wrong time to start.
An investment is something you can buy and hold with the hope that it will make you money. Like a seed, it needs time to grow into a tall tree or produce delicious fruit. But like plants, it's no guarantee that things will go as planned. Through diversification, buying a bunch of different things increases your chances of some of those "seeds" doing well, even if others don't.
A portfolio is a window into your investments. You can see every asset in one spot so that it is really easy to manage. Think about it like a toy chest — you get to store and see all of your goodies in one place.
You've heard the warning, "don't put all your eggs in one basket." Diversification is like putting your eggs in different baskets to ensure that if something happens to one basket, you still have eggs to bring home later.
This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals.