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.

How does diversification reduce risk?

Diversification reduces risk by investing in vehicles that span different financial instruments, industries, and other categories. Unsystematic risk can be mitigated through diversification, while systematic or market risk is generally unavoidable.

What is investment portfolio diversification?

Achieving investment portfolio diversification is all about striking the right balance between risk and potential for financial reward.