Successful investing is not a matter of luck or magic but of following some basic principles of modern portfolio theory. These principles help investors choose different asset classes, such as stocks, bonds, and precious metals, that can work together to achieve their financial goals.

Some of the most important principles are diversification, compounding, and hedging. diversification means spreading your money across various assets with different risks and potential returns. Compounding means reinvesting your earnings to grow your wealth faster over time. Hedging means protecting your portfolio from losses by using assets that tend to move in opposite directions relative to the broader markets.

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Source Fool.com