Both fees and diversification are critical when investing

— -- Q: Should beginning investors be more concerned about fees or diversification?

A: Should investors just starting out be more worried about fees or diversification? That's like asking someone learning to ride a bike what's more important: balance or pedaling. They're both critical.

Investors trying to create their first portfolios are often snagged by either fees or a lack of diversification.

Regarding fees, some investors might plunk their money in a hot mutual fund. Then, years later, not only did the hot fund manager choose stocks that failed to deliver a better-than-average return, but investors paid 1% or more of their money for the poor performance. Some investors routinely write and tell me about how expensive advice they're getting from advisors is, only to be steered into financial products that aren't appropriate for them.

Diversification is another foible for investors, especially those just starting out. Many investors are on the constant search for that one miracle stock or investment that will right all their financial wrongs, put them on a path toward a comfortable retirement and give them financial freedom. Unfortunately, more often than not, investors bet big on stocks that looked great in theory but didn't pan out in reality.

The answer? You need to keep an eye on your fees and make sure your portfolio is diversified. By keeping fees low and paying commissions that are appropriate for you, you can make sure the gains you earn stay in your pocket, not your brokers'.

Not only do such investments have low fees, but they are diversified baskets of stocks, too. Your investment dollars are spread over 500 stocks in different industries and with different valuations.

If you take a few moments to consider the many low-cost diversified ETFs, you can easily put your investments on the right path. You might even find keeping your costs down and being diversified is even easier than riding a bike.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz