Final answer:
You should adjust your investment portfolio over time in response to market expectations, investment goals, and life circumstances to account for risk and align with personal financial strategies. Diversification and investing in index funds also help to manage risk and work towards financial wealth.
Step-by-step explanation:
Over time, you should change the composition of your investment portfolio in response to D) All of the above: A) market expectations, B) investment goals, C) life circumstances. This approach takes into account that market expectations can influence stock prices, which are based on future profit predictions. Additionally, as investors have different objectives at various stages of life, their portfolios should adapt to align with these evolving investment goals. Life circumstances also play a significant role, as personal events can alter one's financial situation and risk tolerance.
Moreover, it is essential to practice diversification, by investing in a variety of companies or through mutual funds, to spread risk. Index funds are a type of mutual fund that aims to replicate the overall behavior of the stock market, thus offering a diversified portfolio in itself. Starting to save money early in life and gaining further education and training after high school are strategies that can help in accumulating financial wealth over time.