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What is a diversified stock portfolio?

A diversified stock portfolio contains a broad variety of stocks, but it is still focused on that single asset class. When we discuss diversification among asset classes, the same concept applies but over a broader range.

What is a good diversified portfolio?

Most well-diversified portfolios are a mix of stocks, bonds, and cash. And you can achieve proper diversification with just 3–5 investments. Plus, that's how several billionaire investors recommend you invest. Below is a complete overview of how to balance risk and reward, a look at asset classes, and five examples of diversified portfolios.

Can a diversified stock portfolio reduce risk?

One thing even new investors understand is the concept of diversification, or the blending of asset classes to reduce risk. But even with a well-diversified stock portfolio, an individual is still exposed to market risk (or systematic risk ), which cannot be reduced by adding additional stocks.

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