It is always important to remember that there is no one investment strategy appropriate for everyone. Each individual has specific goals and financial circumstances that must be considered before making investment decisions. Professional investment advisors generally agree that the basic rule is to diversify your assets so that they reflect your particular circumstances, such as age, income, years to retirement, and tolerance for risk.
This diversification process is known as asset allocation. Asset allocation helps to balance your investment choices among asset categories such as money markets and fixed annuities as well as investments in stocks and bonds. Such balancing may help smooth out the inevitable ups and downs of the market.
Finally, investors must remember, that there are large differences within categories of funds. Some stock and bond funds are riskier than others because their investment objectives are different. You should always make sure you understand the investments' objectives. Request and read a prospectus and annual report.