Investing & Markets

Diversification

Spreading investments across different assets to reduce overall risk.

Diversification works because different assets often don't move in the same direction at the same time, so losses in one area may be offset by gains in another. It can be applied across asset classes (stocks, bonds, real estate), sectors, geographies, and individual securities. Diversification reduces risk but doesn't eliminate it entirely, especially during broad market downturns.

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