Your savings have a purpose. They help you work towards your goals and objectives. In order to attain your objectives you need to ensure you are making the most of your savings strategies.

You know you need to save but in today’s volatile and low yield investment environment you may be puzzled as to how best to invest your money. Most investment professionals agree that diversification is the most important component in helping you reach your financial objectives while minimizing risk. But what is diversification?

According to Investopedia “Diversification” is a risk management technique that mixes a wide variety of investments within a portfolio. Your investment portfolio could consist of a mix of equity, fixed income and cash. These are categories. The percentage of each category is based on a number of factors, including age and time horizon. A successful diversification strategy should also include a variety of asset classes, asset class specialists, as well as both traditional and alternative investments. A well-diversified portfolio should result in overall better performance and lower volatility. In fact The Wall Street Journal sited that by replacing 20% of a traditional portfolio (invested 60% stocks and 40% fixed income) with a broad mix of alternative investments that volatility could be reduced by as much as 10%.

Diversification is arguably the most important way to mitigate risk and possibly improve overall return. Ask a investment professional how to effectively diversify your savings so that you will be successful in reaching your goals and objectives.