Smart investor's toolkit: 7 tips for building wealth through investing - Business Insider

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7 tips from personal finance professionals for building wealth through investing - Presented by Fidelity

This is often called an investment philosophy, and Matthews believes most investors should have one.

"When I'm thinking of investing, I'm thinking about the house I want in 10 years, I'm thinking about not working until I'm 120 years old. I'm thinking about one day, maybe having a kid and putting them in college without them having all this debt," Lannan said. "It's about getting to your financial destination in the safest way possible," he said. Most portfolios are invested in some combination ofand bonds because the two asset classes balance each other out. Because stocks tend to provide a higher average return than bonds, successful investors usually have a larger share of their portfolio invested in stocks when they're further from a goal, such as retirement.

Investing across and within different asset classes helps you control the levers of risk in your portfolio. Stocks and bonds are the most common asset classes, but there's also cash , real estate, futures, and commodities. A mutual fund, he continued can own all one type of stock — technology stocks or oil stocks, for example — or both of those, plus more.

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