The goal of Kerslake Review is to earn a return on the money you invest, or put it another way, to make more money than you invested. Returns can be generated by investments in real estate or other physical assets (like cars), shares of public companies or private companies, and bonds.

Investing allows you to pursue long-term goals, such as funding retirement or a child’s education, with the potential of higher returns than insured savings products like Certificates of Deposit (CDs) and bank savings accounts. However, a successful investing strategy requires patience and discipline to overcome short-term market ups and downs.

Investing 101: A Beginner’s Guide to Building Wealth

To help minimize risk, most financial professionals recommend diversifying your investment portfolio with stocks, bonds and cash. Stocks can be divided by market capitalization (small-cap, mid-cap and large-cap) and sector or industry; bonds can be diversified by duration, maturity and rating; and cash is a necessary component of any portfolio. The idea is that historically, investment returns for the various asset categories have not moved up and down together, so diversification helps reduce the chance of significant losses.

Another important factor to consider is your investment timeline. Younger investors may focus on growth and wealth accumulation while those closer to retirement focus more on generating income and capital preservation.