Diversifying Your Investments
Striking a balance between risk and reward is important to every investor.  One way to create a balance can be through diversification.  When you diversify, you distribute your investments across several types of investments or asset classes, some with higher risk and some with lower risk.  In other words, don't put all your eggs in one basket. A well-diversified portfolio might include stocks, bonds and savings vehicles (e.g., CDs) to help even out the ups and downs of the market. You'll want to pick your own mix based on your risk tolerance, investment styles, investment goals and time horizon.  Note that while diversification through an asset allocation strategy is a useful technique that can help to manage overall portfolio risk and volatility, there is no certainty or assurance that a diversified portfolio will enhance overall return or outperform one that is not diversified. Diversification cannot eliminate the risk of investment loss.

Types of Investments
Once you understand the roles of risk and reward in investing and have determined your own risk tolerance, consider the types of investments that might be right for you. Even with a small amount to invest, you generally have plenty of choices. Here's an overview of some of the most common opportunities.

Savings Options
Savings vehicles tend to be lower-risk/lower-return options.  Following is a quick guide to the most common savings vehicles:

Savings accounts. A savings account is a good place to hold emergency funds, reserves, and money for short-term financial goals. Funds are typically liquid, or readily accessible, and the Federal Deposit Insurance Corporation (FDIC) generally insures savings accounts up to $100,000. The main drawback is low interest rates. The interest rate paid on a savings account is often lower than the rate of inflation, so your savings may not grow as fast as the rising price of goods and services. That may make savings accounts unsuitable for your long-term goals.

Certificates of Deposit. Also known as CDs, certificates of deposit generally earn more interest than savings accounts with equally little risk but with less liquidity. Like savings accounts, bank CDs are generally insured up to $100,000 by the FDIC. CDs typically provide higher interest rates than savings accounts in exchange for your agreement to keep the money in the CD for a fixed period of time, usually three months to five years. Generally, the longer the term of the CD, the higher the interest rate. If you take your money out before the end of the time period or CD maturity date, you'll pay a premature withdrawal penalty to the financial institution.

Money Market Accounts. These accounts usually earn slightly higher interest than a savings account but still allow easy access to your money. Some banks and financial institutions require an initial deposit of $1,000 or more and limit the number of withdrawals or transfers you can make during a given period of time. Bank money market accounts may also be FDIC-insured up to $100,000.

Money market funds issued by other financial institutions (e.g., a stock brokerage) are not FDIC insured and may lose value. Although they seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.