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Key takeaways. Diversification involves spreading your money across a variety of investments and asset classes. A diversified portfolio helps to reduce risk and may lead to a higher return.
“This means spreading your money across a variety of investments and asset classes.” Discover: 7 Bills You Never Have To Pay When You Retire Create a Target Retirement Fund
The simplest example of diversification is provided by the proverb "Don't put all your eggs in one basket". Dropping the basket will break all the eggs. Placing each egg in a different basket is more diversified. There is more risk of losing one egg, but less risk of losing all of them. On the other hand, having a lot of baskets may increase costs.
Diversification could cost more: Fewer investments can be safer and more profitable than spreading money thinly across many. Yes, diversification can potentially limit portfolio losses, but only ...
Example investment portfolio with a diverse asset allocation. Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame. [1]
Economic diversity or economic diversification refers to variations in the economic status or the use of a broad range of economic activities in a region or country. [1] Diversification is used as a strategy to encourage positive economic growth and development. [ 2 ]
Alamy One of the fundamental rules of investing is not to put all your eggs in one basket. But even investors with diversified portfolios haven't gotten the results they wanted from their ...
Diversification (finance) involves spreading investments; Diversification (marketing strategy) is a corporate strategy to increase market penetration; Diversification of firms through mergers and acquisitions