How to diversify portfolio by age

When the market is booming, it seems almost impossible to sell a stock for any amount less than the price at which you bought it.

However, since we can never be sure of what the market will do at any moment, we cannot forget the importance of a well-diversified portfolio in any market condition.

Diversified portfolio example

For establishing an investing strategy that tempers potential losses in a bear market, the investment community preaches the same thing the real estate market preaches for buying a house: "location, location, location." Simply put, you should never put all your eggs in one basket.

This is the central thesis on which the concept of diversification relies.

Read on to find out why diversification is important for your portfolio and five tips to help you make smart choices.