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What is portfolio diversification?

Portfolio diversification is selecting several asset classes to increase returns while lowering risk. The asset classes for portfolio diversification are stocks and bonds: treasury and non-treasury. The elements of portfolio diversification are risk-free, low-risk, medium, and high-risk.

What is the optimal portfolio diversification strategy?

The optimal portfolio diversification strategy depends on your specific financial objectives, risk tolerance, and investment timeline. However, a fundamental principle is to distribute your investments across various asset classes. In short, the primary aim is to mitigate risk by avoiding over-concentration in a single investment or asset class. 2.

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.

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