How Do I Diversify My Investments?

Diversification — having many different investments — reduces the effects that short-term market fluctuations will have on the value of your overall portfolio. If some of your investments are not performing well, their performance will likely be balanced by others which are doing better at any given time.

Mutual funds and segregated funds are a popular, easy and economical way for investors to start building a diversified investment portfolio. When you invest in a mutual fund or segregated fund, also called an investment fund, you pool your own money with thousands of other investors’ money. Indirectly, you become an owner of the individual investments purchased by the fund. Your ownership in the fund is measured in "units."

What Are Segregated Funds?

Segregated funds offer the same features and advantages of mutual funds, but contain other features that are not available with regular mutual funds. Unlike mutual funds, segregated funds are provided through an insurance company. By law, money you invest in segregated funds must be kept separate — segregated — from the insurance company’s other assets. This protects you in the unlikely event the company becomes insolvent. Additionally, if you meet certain conditions, segregated funds offer you special protection from creditors looking to seize your assets.

Click Here to Learn About the Different Types of Investment Funds