When you invest in a mix of different types of investments, you are diversifying. Diversification means lowering your risk by spreading money across and within different asset classes, like stocks, bonds, and cash. By diversifying your portfolio, you can better weather market ups and downs while maintaining your investment's potential for growth. According to the Schwab Center for Financial Research, you should be concerned if a single stock accounts for 10% to 20% or more of your total stock investments. Generally speaking, the wider the number of holdings, the greater the diversification benefits. If you only hold two or three stocks in your portfolio, it won't be enough to reap the benefits of diversification.

Market timing (trying to buy stocks at market lows and sell at market highs) is nearly impossible, even for professional investors. There's a saying to keep in mind: Time in the market is more important than timing the market. Instead of trying to time the market, focus on getting invested and staying invested—and even making it a habit via regular contributions. There's a term for this, actually: dollar-cost averaging. Dollar-cost averaging refers to the practice of investing a set amount of money at regular intervals (biweekly, monthly, etc.), regardless of stock market performance. Dollar-cost averaging establishes good investing habits and is a prudent strategy to consider, especially for new investors.

It depends on how much you have, as well as your goals and timeline to achieve those goals (also called your time horizon). But a good rule of thumb is to invest the maximum you can comfortably afford, after setting aside an emergency fund, paying off high-cost debt, and funding daily living expenses. By investing on a regular basis, over time you can potentially achieve greater returns through compounding.

Generally, sooner is better. Many investors sit on the sidelines, waiting for the "right" time to invest. Unfortunately, timing the market is virtually impossible. Instead, consider just getting started, and remember this old investing adage: Time in the market is more important than timing the market.

Saving and investing work hand in hand in building long-term wealth and financial security. Saving money is spending less than you earn and setting that money aside for the future—whether that's for an emergency or for a specific goal like a vacation or a new home. Most savings are held in conservative accounts that are relatively safe and easily accessible but have minimal growth potential. That's appropriate for short-term goals, but your money is likely to lose value over time when taking inflation into account. When you invest, on the other hand, you're using money to try and make more money. If your investments grow in value, that growth can compound. Compounding (or compound growth) is what happens when you reinvest your earnings—and keep them invested—to generate more earnings. Over time, this can lead to significant gains. Time is an essential ingredient, helping to smooth out market volatility. That's why when you have a long-term goal like a child's education or retirement, investing can be especially important.