So I have now determined the need to catch up and have investigated a number of options and have discussed my problems with a number of people I know who work in the investment business. Some have recommended 'balanced' portfolios, some say to invest in mutual funds, and others have other ideas. Do you get as confused as I do by all of these options? The most common of all buzzwords that I keep finding is asset allocation (which is actually two separate words). I have discovered that there is a theory floating around the investment community which states that 'risk' goes down the more a portfolio is diversified. After reading more than thirty investment books over the last two months I have determined that risk can refer to both volatility (the up and down fluctuations of value in the investment price) and to the 'risk' of not being invested in a the best performing investment on earth. As none of us has a crystal ball the theory goes that we have to spread our investment dollars across a number of different investments in order to maximize our chances of getting that great investment. In a way it reminds me of a gambler at a horse race that wants to guarantee his being able to win by betting on every horse in the race. By betting on each horse he will guarantee his ability to bet on a winner even though the majority of his bets will end up being losers. A friend who works as a stockbroker told me this was a bit extreme but I am just a novice trying to come up with a way to understand what is going in the investment arena. This journey is in some ways like trying to learn a new language! Extreme examples aside I can truly say that I truly believe from my research that if done right it is almost impossible to lose all of your money in an investment unlike a horse race even though I am thinking that the asset-allocation mentality I am seeing seems to be very much aligned with the gambler who bets on every horse. This isn't an entirely positive thing because it seems entirely possible for an intelligent person to be able to create a portfolio without spreading what little dollars are available to invest among an untold number of different asset classes. I don't know about you but I have gotten entirely excited just seeing my little portfolio grow to $1,000 over the past four months. This has taken sacrifice and serious budgeting but I am sure it will be worth it in twenty years when I am ready to retire!