So if the key to getting a head start on diversification is to focus on a few stocks that pull from various industries and products, instead of focusing on a large amount of stocks in only a few sectors, where do I start?
Jason Nolan of Magnet Investment recommends Sociedad Quimica y Minera de Chile S.A. (or SQM, also known as the Chemical and Mining Company of Chile) (SQM) and Robbins & Myers (RBN), both of which offer diversification from within the companies, translating to diversification in my investments.
Of course, when talking about investing in stocks it's always a good idea to look into mutual funds as well. And considering that two stocks will never get the job done for me, that's exactly what I would be wise to research next.
Ideally, as a working adult, I would be using my 401(k) and putting more of my income towards a diverse array of mutual funds or exchange-traded funds and
individual stocks, but with the amount I have to work with now, I'd rather start with one fund to go with two diversified stocks for some shorter-term growth. One fund and two stocks (combined with my CD) can add some low- to medium-risk growth potential to a previously nonexistent investment portfolio.
Financial planner Adam Leavitt suggests anchoring any fund portfolio with "blue chip choices such as the Vanguard Growth Index (IGRX)." This fund is low-cost enough (minimum investment: only $3,000) to meet my current needs and it focuses on well-known large-cap stocks, such as Wal-Mart (WMT) and Proctor & Gamble (PG). While these may not be the most exciting companies, the overall reach of a fund like this makes it a good choice to consider as a supplement to any individual stocks I decide to invest in.
