What is diversification in investing?

Diversification is the process of spreading investments across different asset classes, industries, and geographic regions to reduce the overall risk of an investment portfolio.

Should you diversify your investment portfolio?

Investing in the stock market will always come with some risks. But a well-diversified portfolio is one of your best defenses against market downturns or financial crises—not to mention a cornerstone of building long-term wealth. Still, as a beginner investor, you might be wondering how to strategically diversify investments.

How do I diversify my investments?

You can start with a mix of cash, stocks, bonds, or government securities. Once you develop confidence in your decisions and have sufficient capital, you can further diversify into areas like global markets and real estate. Here are the ways in which you can diversify your investments. Invest in money market securities for cash.