Each kind of asset has its own personality
Stocks tend toward the dramatic—they can be way up one day and way down the next. Anything from economic reports to marketplace rumors to natural disasters can sway them.
Bonds are more sedate. Their prices aren't as likely to experience swings in direction from day to day, and their ups and downs tend to be less exhilarating than those of stocks.
Cash investments are the calmest of all. Their value barely changes from day to day.
Perhaps you gravitate toward one of these "personalities" more than others. But holding a mix of them can be the best solution of all.
By mixing different types of investments together, you lower the overall risk in your portfolio, since different types of assets usually perform differently at any one time. This doesn't mean you can't lose money; it just means that you're better protected.
It also gives your account balance the opportunity to grow at a rate higher than you'd see with an all-cash portfolio, but in a more stable manner than you'd experience with an all-stock portfolio.
