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Deep Dive: Here’s how to easily reduce your investment risk just at the right time

Investors are often told to diversify and choose low-cost index funds or exchange traded funds (ETFs).

Still, the S&P 500 Index is weighted by market capitalization and a volatile October emphasized how much risk was concentrated at the top. So what’s an investor to do?

Mike Lowengart, E-Trade’s vice president for investment strategy, outlined ways to diversify while lowering your portfolio risk at a relatively low cost.

One could argue that the S&P 500 SPX, +0.63% is diversified because it includes 500 companies. However, its market-cap weighting concentrates risk in large companies, many of them in the technology industry.

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