Many investors will include some equity investments in their investment portfolio. They may buy some individual stocks, equity mutual funds, or a combination of the two. Still, stocks and mutual funds are not always the right choice for all investors. 

Who may be more likely to invest in stocks and mutual funds?

People who invest in stocks and mutual funds often:

• feel more comfortable with taking some risk to pursue a higher return
• have a longer time horizon (they have more years to invest, so they can choose when they sell). 

Who may be less likely to invest in stocks and mutual funds?

People near retirement (or another time when they will need their money) often invest less in common stocks and mutual funds. They move their money into investments with a more stable or guaranteed return. For example, they may invest in preferred shares as a way to create a steady stream of  income.

Diversifying stocks in your portfolio

Diversifying stocks in your investment portfolio means having a mix of different kinds of stocks in your portfolio, like stocks of companies from different industries. It can also mean investing in equity mutual funds, or holding stocks as well as equity mutual funds. By diversifying their stock holdings, investors help reduce risk as they look for the better returns. 

Are stocks and mutual funds a good choice for me at this stage of life?

The right mix and types of equity investments for you may change as time goes on. Ask yourself:

• Is there any reason to increase, or decrease, the level of stocks and mutual funds in my portfolio?
• Is it time to change any equity investments I now own – either by selling or buying? 

Watch this video of Moshe Milesvsky, a professor of finance at Toronto's Schulich School of Business, with Rob Carrick from the Globe and Mail discussing advanced portfolio building.

Remember: Your investments should fit your age, and tolerance for risk.