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.

Should you diversify across stocks?

Fidelity also believes it’s smart to diversify across stocks by market capitalization (small, mid, and large caps), sectors, and geography. Again, not all caps, sectors, and regions have prospered at the same time, or to the same degree, so you may be able to reduce portfolio risk by spreading your assets across different parts of the stock market.