invest the money in share market Back in 2006, everyone was super bullish on India, and I had invested a big chunk of my money in mid and small cap companies, i.e. smaller, less-known companies. While the larger companies were ok, there was a huge fall in the stock prices of the smaller companies that I held. In hindsight, I should have diversified my portfolio to include a mix of big and small companies. Another example of this was when most people working for Enron put all of their pension (401K) into the Enron stock. You must have heard people say – “This is a sure shot”, “The stock WILL double in the next 2 years”. Today you hear these in the property market more than in the stock markets, and which is why I stay away 😉 What most people do not realise is that apart from the performance of the company, there are several other factors that could affect stock prices. Macro factors such as interest rates, government regulations, and even terrorism today affect countries, sectors and companies. If you end up investing significantly in one stock and that company is affected by any of the macro factors, you may suffer. Ideally you should look to create a diversified portfolio of stocks, bonds, etc. depending on your risk-taking ability, time to retirement, etc. 12428

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