For the 70th anniversary of Kiplinger's Personal Finance, we are offering our best ways to build wealth -- and that includes not putting your eggs in one basket.
Spread out your investments
Playing it safe with a diversified mix of stocks and bonds can help your portfolio stay afloat during bad times and improve your long-term returns. If you have at least 10 years until retirement, for example, hold 70 percent of your portfolio in stocks and 30 percent in high-quality bonds.
A mutual fund can work nicely, too. Vanguard Wellington (symbol VWELX), a member of the Kiplinger 25 (the list of our favorite mutual funds), holds about two-thirds of its assets in stocks and the rest in bonds, and it has an annualized 8.2 percent return over the past 20 years.
Give emerging markets a shot
Emerging-market stocks deserve a place among your assets. Not only are the stocks relatively cheap, but corporate earnings in emerging-markets firms are expected to expand by more than 13 percent in 2017 -- far more than firms in the U.S.
For access to these stocks, invest in Baron Emerging Markets (BEXFX), a Kiplinger 25 fund, or in exchange-traded iShares Core MSCI Emerging Markets ETF (IEMG), which tracks an index.
Try on some small stocks
After you've stashed money in an emergency fund and maxed out contributions to retirement accounts, consider taking a moon-shot on stocks that could turbocharge your returns.
Small, fast-growing companies may be a good bet now because small companies should benefit from a focus on the healthy U.S. economy, and they could get a lift from fewer regulations and lower corporate tax rates now being considered in Washington. Two top choices: T. Rowe Price QM U.S.Small-Cap Growth Equity (PRDSX) and T. Rowe Price Small-Cap Value (PRSVX), both members of the Kip 25.
Also on our shopping list these days are companies cashing in on high-tech trends. Chipmaker Broadcom (AVGO), factory robotics firm Cognex (CGNX) and cybersecurity company CyberArk Software(CYBR) all look compelling. We also like biotechnology stocks for their long-term growth prospects. You can buy a bundle of them in an exchange-traded fund such as SPDR S&P Biotech ETF (XBI).
You'll need to trim your winners periodically and add to your laggards to keep your mix intact.
Check your brokerage statements every six months to see if your portfolio has veered off track. If your allotment to a particular category has drifted by more than five percentage points from your target allocation, make the needed trades to bring your allocations back into alignment.