#2 Diversify

your investments: it helps lower your overall risk.

You know instinctively that diversity is a good thing: A range of different personality types at work make a great team. Keeping a few irons in the fire is better than putting all your eggs in one basket.

How To Make It Happen

The more time you have, the more risk you may be able to afford.

Each investment goal needs its own mix of , and (all called “securities”), and the composition depends on how much time you have until you want to “cash out.” For instance, if you have 30 years before you need to use your money, you may be able to take on more risk with a larger portion of your portfolio in stocks. If you only have a few years, less so.

Explore how Ellevest assigns risk to each goal using your timeline.

Your stocks, bonds, and alternatives should be diverse too.

You want broad exposure across different markets so you have a better chance to ride out the volatility among any one of them.

Diverse Stocks

Think about stocks from different-sized companies, in different industries, and from different countries.

Diverse Bonds

Think about domestic and international government and corporate obligations.

Diverse Alternatives

These can include foreign and domestic real estate, natural resources, and even commodities like gold and wheat.

Get Professional Advice

One thing you don’t want to do is figure out how to distribute across these yourself. That’s why you should consider investing in funds that comprise stocks, bonds, and alternatives — and it’s why we recommend you get professional advice, which we’ll get to soon.

Start investing in your own set of diverse, goal-based portfolios in 15 minutes.

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See How It’s Done

Meet Jen

31-year-old marketing director ready to take #adulting to the next level.

Jen makes $85,000 a year and lives with her girlfriend. She maxes out her 401(k) at work, but she’s also got her eye on some shorter term goals.

Disclosure: For illustrative purposes only. This is a hypothetical client scenario and does not represent any Ellevest client or confer individually tailored investment advice.

  • Home down payment

    Have 20% in six years

  • Big Splurge

    Epic vacation in four years

Level Up: Buy the Dream House and Travel More

  • Invests for a down payment on a home in six years by setting up “A Place to Call Home” goal.
  • Makes initial deposit of $35,000 into “home” goal and contributes $500 monthly.
  • Sets up “Big Splurge” goal to pay for herself and friends to go to the South of France for her birthday. She estimates the trip will cost $10,000, and she invests $212.50 monthly.

What do her investment portfolios look like?

Each of her goals has a different timeline and therefore requires its own investment portfolio with a different balance of securities.

Jen’s Home Goal

Investment Portfolio Made of ETFs that are

34% stocks, 64% bonds, and 2% alternatives

Jen’s birthday trip Goal

Investment Portfolio Made of ETFs that are

39% stocks, 59% bonds, and 2% alternatives