Increasing Wealth While Limiting Risk - as part of the expert series by GeoBeats. There are three words I want you to remember. One is diversification, one is asset-allocation, and the third is rebalancing. And this is how it works. You take your money and you divide it into categories. You are going to put so much into US Stocks, so much into International Stock, so much into bonds. Within those categories, you are going to diversify even further and put some into large cap, mid cap, small cap - US stocks; Large cap, mid cap, small cap - international. Add a little dose of emerging market stock. And in bonds, there are several kinds of valuable bonds. There are high held bonds, there are corporate bonds, there are government bonds, there are emerging market bonds. This is what, when I say diversification, it means you are having your money in a lot of different things. All the asset classes available. Deciding what percentage to put into each one is called asset-allocation. OK, so you get that set that you do not want to leave that stagnant. What if the US market has a boom year and goes up 30%? So all of the sudden, you have a little bit more in US Stocks than you did before. So each year you want to look at your allocations and rebalance back to your original allocation. What does this do? It means you are selling when something is high, and you are buying something that is low, because you are going to sell this stock or category that went up and then you are going to put that money into the category not doing so well. That way you are, it is an active way of investing your money, and you need to keep an eye on it so you are paying attention. And if you use this strategy of diversification, asset-allocation, and rebalancing, you will dramatically reduce the risk, and you will grow your money.