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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 investments?

For more information on diversification, see Asset Allocation. Diversification can be neatly summed up as, “Don’t put all your eggs in one basket.” The idea is that if one investment loses money, the other investments will make up for those losses. Diversification can’t guarantee that your investments won’t suffer if the market drops.

Why should you diversify your investment portfolio?

Diversification is the simplest way to boost your investment returns while reducing risk. By choosing not to put all of your eggs in one basket, you protect your portfolio from market volatility. Diversification may look a little different for each investor.

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