The gist of “I Will Teach You to Be Rich” from Ramit Sethi (vol.38)
Investing is not about picking stocks. The picking has risk in any good stocks, and experts can’t guess what will happen to the stock market. Instead, investing focuses on risk and return in the process. Diversifying your investments across different asset classes like stocks and bonds or, better yet, stock funds and bond funds can control the risk in your portfolio. So, asset allocation is the most significant part of your portfolio that you can control. As an asset diversification, let’s look at each investment subject briefly. Firstly, index stock like Dow Jones and the S&P 500 is recommended rather than single stocks due to hedging risk, and the stock market’s average return is 8 percent per year. Secondly, bonds are essentially IOUs from companies or the government. The Government Bonds are generally stable and let you decrease the risk in your portfolio.