There are different asset classes available for you to invest in; equity, bonds, gold and silver and real estate. Their values do not move in sync. For instance, when equities go up, typically gold does poorly. How do you ensure that your portfolio profits from the up-move from its underlying assets, yet at the same time, gets cushioned when things go bad? The answer is asset allocation. Since their markets can go through different cycles, it is best to diversify your investments across different assets. Don't put all your eggs in one basket. And if you are first time investor it's best to take the mutual fund route.