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aware that you can-and should-diversify further by investing in other assets, such as property.
How much diversification is enough?
I suggest twenty share holdings or mutual fund holdings should be adequate.
The following suggests the percentages of the different risk-rated investments by your risk tolerance:

Conservative
45% - conservative shares/funds
40% - moderate shares / funds

15% - aggressive shares / funds
Moderately Conservative
35% - conservative shares/funds
50% - moderate shares / funds
15% - aggressive shares / funds
Moderate
25% - conservative shares/funds
55% - moderate shares / funds
20% - aggressive shares / funds
Moderately Aggressive
15% - conservative shares/funds
55% - moderate shares / funds
30% - aggressive shares / funds
Aggressive
10% - conservative shares/funds
35% - moderate shares / funds
55% - aggressive shares / funds

You may notice a couple of seeming anomalies: Conservative investors have some aggressive investments, and aggressive investors have some conservative investments-a small portion in each case. This ensures a degree of safety for the aggressive investor, and ensures that the entire conservative portfolio will perform adequately.
What is the difference between shares and mutual-funds?
My recommendation is that you start with mutual funds, and, only once you have honed the analytical skills you need, invest in the share market. In a share portfolio, managed well-that is key, managed WELL-the returns will ultimately be more consistent than in mutual funds. By investing in mutual funds you are putting your trust in a fund manager, whose job is to be analyzing the share market on a daily basis, and who manages a diversified investment portfolio.
Invest successfully. It is important to analyze and decide and act on your decisions. If you wait, saying, "Perhaps that share will go up even more!" you will, in the long-term lose out and shoot yourself in the investment foot-probably more painful than a real bullet.

Learn more about this author, Geoff George Paxton.
Click here to send this author comments or questions.

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