How to Create a Diversified Investment Portfolio

Vanguard paper on how to create a diversified investment portfolio.  {Executive Summary}

1. Define your investment goals and constraints.

2. Have a broad strategic allocation among the primary asset classes such as equities, fixed income, and cash.

3. Choose your sub-asset allocation within such classes, such as U.S. or non-U.S. equities or large-, mid-, or small-capitalization equities, and so on.

4. Decide if you will use a passive, {indexed} and/or an actively managed approach to your assets.

5. For taxable investors, allocation of investments in taxable and/or tax-advantaged accounts.

6. Decide on the selection of individual managers, funds, or securities to fill allocations. 

Link:  Vanguard Investments: Vanguard's Framework For Constructing Diversified Portfolios.