What is investment portfolio diversification? Back to list

Member SinceJul 08, 2021

Posts 541

Kihn

May 09, 2022 a 12:05
Diversification of investment portfolios derives from a very simple concept that everyone understands:

“Don’t Put All Your Eggs In The Same Basket”


Diversifying your portfolio means adding different types of assets to it. There will be times when some of your holdings will lose money despite your wish that they will all soar. When this happens, you must make other investments to compensate. It is important not to put all your eggs in one basket in order to prevent creating an unwanted risk to your capital.

Diversification can lower your portfolio's risk by ensuring that one asset or asset class doesn't affect the entire portfolio. Typical diversified investment portfolios include Gold, Forex, Stocks, Crypto, Energies, Indices, and other commodities. Diversification is advantageous because each asset reacts differently to the same economic events.

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