Portfolio Diversification Is the Simplest Way to Lower Risk. Here's How I Build Mine.

Key Points I eventually want to live off the income my portfolio generates, so I focus on dividend stocks. Like Warren Buffett, I'm comfortable holding cash until an attractive investment arises. My portfolio spans multiple sectors and includes a reasonable number of stocks, with pooled investment products further diversifying my holdings. 10 stocks we like better than PepsiCo › To summarize my investment approach, I prefer to buy companies with long histories of dividend increases and historically high yields. Those two traits don't come around all that often, and sometimes I find clusters of stocks in specific sectors. I need to think specifically about diversification, one of the simplest and most effective ways to reduce risk.