Diversification

The practice of spreading investments across different assets to reduce risk.

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Diversification

Diversification means investing in different assets to minimize risk. A diversified portfolio is less likely to suffer large losses from a single bad investment.

  • Invest in various asset classes (stocks, bonds, real estate, commodities).
  • Spread investments across different industries.
  • Consider geographical diversification.

Key Points

1

Reduces overall investment risk.

2

Helps balance portfolio performance.

3

Avoids overexposure to a single asset.

Last Updated: 3/16/2025

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