On Monday, Canada's stock market took the biggest dive in the last three months, shedding 206 points as commodity prices tumbled. So, not only are rising interest rates and inflationary fears spooking the investors into a sell-off, but now commodities are also losing their footing. Natural gas is trading at the low end of its 52-week range, oil shed two bucks, while zinc lost more on Monday than in the last 16 years!

I understand that some of you may be wary of commodities by now. Heck, it looks like there is nowhere to hide from the kind of pounding the stock markets endured yesterday. But, there is one more option investors in Canadian investment vehicles may find appealing--a strategy called index-investing.

When you are index investing, it really means that you are buying the entire market. In case of Canada's benchmark index, S&P/TSX Composite, about 45% of it consists of energy and material stocks, including metals and gold stocks. Also, with the S&P/TSX 60 Index, which includes Canada's large caps, the exposure to commodities goes up to about 41%.

Now, for some investors, buying broad index funds or exchange- traded funds, this much exposure to commodities may be just a bit too much to stomach. Here is a suggestion, try buying specialty and sector exchange-traded funds. For example, there is iShares CDN Large Cap 60 Index Fund, which holds "only" about 27% of energy stocks and 14% materials. Add to it a healthcare stock or some other bellwether not included in any Canadian-market ETF, and you may diversify your portfolio just to your liking.

Another option may be dividend exchange-traded funds. For starters, such ETFs typically consist of a nice mix of high and low yielding stocks, offering potential for both income and capital growth.

Of course, before you dive into index-investing, just ask yourself how confident you are in commodities at this point? Although I feel just fine having more than 50% of my portfolio in commodity stocks, this rollercoaster ride is not for everyone.

I know that these days, investment advice is coming out of the woodwork and dragging people in all kinds of directions. It is not humanly possible to listen to everyone, nor is it statistically possible for everyone to be right.

The key thing is your risk tolerance level. When asking yourself "How much money I am comfortable losing?" you must be brutally honest. You cannot answer this question by nonchalantly dismissing x-amount of dollars just to impress your friends or your broker. It is one thing to say it, and quite another to actually lose money right out of your pocket. I should know, been there, done that!

What I'm trying to say is that if yesterday's slaughter on Canada's stock market gave you a scare, it is OK to try and minimize risk by diversifying. Having 50% or 60% of holdings invested in commodities is not for everyone. But, if there is a way to keep you invested in precious metals, even if on a little conservative bend, we're all for it!