Stress-Free Investing in Four Easy Steps, Part 2

Here's part 2 of an article from Kiplinger's where they promise to share four mantras of successful investing:

Mantra 2: Diversify

This may seem like common sense, but it can be hard to discipline yourself, especially when one segment of the market is outperforming others. But if your investments are too heavily weighted on one stock or even one particular kind of stock, you can deep-six your savings goal. But this is where having a plan -- and sticking to it -- comes in handy.

Mutual funds are a good way to achieve instant diversification.

If you have more money to invest, or are saving through your employer's retirement plan, consider spreading your money across funds that invest in each of the following:

• Large, fast-growing companies ("large-cap growth")
• Smaller, fast-growing companies ("small-cap growth")
• Large companies selling at bargain prices ("large-cap value")
• Smaller companies selling at bargain prices ("small-cap value")
• Foreign companies

Many companies offer their stock as part of their 401k plan. It's ok to invest some of your money here, but don't become over-weighted in it. Your company already is a big part of your financial picture (they provide your salary after all), and if things go south with the company's performance you don't want to end up with a double whammy of losing your job and having your investments take a big hit.

Click here to read part 3 of this series.