1. Keep costs down
In the new era of low returns, it's important to keep fees down to build a winning portfolio. Buy index funds and ETFs, and don't pay for Wall Street's often unreliable advice.
2. Go for dividends
A big gift of today's rocky market is a surge in dividend yields. If you want income for life, grab solid but beaten-down names right now. Two good bets: pharma and utilities.
3. Take a chance on battered stocks
Sure, it takes courage, but the best investors pounce when sectors are bloodied and expectations in the cellar. Two reviled sectors: banks and homebuilders.
4. Look abroad
Diversification is the foundation of a strong portfolio. One way to get there is with a big allocation in international stocks. But true diversification is tricky. We'll tell you how to do it right.
5. Be smart about bonds
You need fixed-income investments for ballast, but the trick is staying ahead of inflation. The three picks for an inflation-racked world: munis, TIPs, and CDs.