Most new investors consider investing to be a walk in the park. Being overconfident in their ability to invest, they end up making costly mistakes that result in loss of thousands of dollars. The reality is that investing in the corporate world is like sailing on a boat in an ocean full of sharks that can gobble you up if you make a mistake and slip from the boat.

Here are 5 things that you should know if you are starting the journey anew in the cold and somewhat frightful world of investment.

The saying, “Don’t put all your eggs in one basket” has long been considered an effective risk management technique. By diversifying the portfolio, the investment amount is spread out among different assets resulting in higher long-term returns for less risk as compared to committing the amount in a single asset.

As obvious as it may seem to appear, a lot of day traders do not consider investing in alternative markets. This is due to either lack of knowledge about the benefits of diversification or fear of applying a day trading strategy on anything other than the stocks.

One of the world’s oldest forms of investment is commodities. It is good practice for a long-term portfolio to consist of trading in commodities, even if it’s only a small percentage, because they remain relatively free from the chaos of individual stock shares. With the latest bull market approaching the 90-month mark, investors should consider whether they need to invest in something more tangible prior to the next bear market.

What does a commodity add to an investment portfolio?

The commodities market allows investors to put their money into something that is more likely to recover any lost value. A company can go out of business, but commodities like gold and silver will most likely always be in-demand. Commodities like water will most definitely, always be in demand. Therefore, investors know they can extract their wealth once the market recovers.