1. Portfolio DIVERSIFICATION Investment Principal #1

2. What is a portfolio? Single investment mixing stocks/bonds A special type of loan Highly-liquid investments Ownership in a company Used for saving The collection of investments you personally hold.

3. What is diversification? Diversification is owning a collection of investments in order to spread risk and have a safer investment overall.

4. What is diversification? Diversification is owning a collection of investments in order to spread risk and have a safer investment overall.

5. Types of markets Bull Market = growing market Bear Market = slow market Stocks do well. Bonds and money markets do well.

6. How do I diversify? • Know your own style How much do you know about investing? Do you like to take risks? • Research What investment options are available to you? • Figure out your time horizon How long do you have to invest before you need your money? • Practice Use Wall Street Survivor and the Virtual Business Sims before it’s your own hard-earned money on the line!

7. Step 1 – Know Your Style • How much do you know about investing? • Beginner, Intermediate or Advanced? • Do you like to take risks? • Take the investment risk tolerance quiz.

8. Step 2 - Research Less Risk More Risk

9. Step 3 – Time Horizon Short Horizon <1 year Intermediate Horizon 1-9 years Long Horizon 10+ years Money Markets Bonds Stocks Less Risk More Risk

10. STEP 4 - Practice • Simulation Lesson 15 – Diversification • Portfolio Check 1 • List your risk tolerance • At least 95% invested in stocks • At least 7 sectors • No more than 30% in any one sector • Proper mixture of large capitalization and small capitalization stocks for your risk tolerance

11. Portfolio Check 1 At least 7 sectors No more than 30% of portfolio $1,000 to $5000 in Cash Must match your risk tolerance.