Diversification is a strategy in which you invest in a wide range of assets in order to reduce risk and maximize returns. It means you aren’t placing all of your capital into a single investment.
It has a number of advantages for you as an investor, the most important of which is that it can boost your expected gains and stabilize your results. You lower the average risk of your portfolio by owning various assets that behave different, ensuring that no single investment can affect you.
Investing in stocks, bonds, mutual funds, ETFs, gold, commodities, or real estate are just a few options for diversification.
Despite of your short interval or goals, diversification is essential. Keep in mind that that today’s top performer could be tomorrow’s fallen star.