“Don’t put all your eggs in one basket.” This classic investment advice is the foundation of diversification. A well-diversified portfolio spreads your investments across different asset classes to reduce risk and increase potential returns.
How to Diversify:
- Stocks: Invest in different sectors (technology, healthcare, energy, etc.).
- Bonds: Low-risk government and corporate bonds provide stability.
- Real Estate: Add real estate investments for consistent income.
- Commodities: Gold, silver, and oil act as hedges against inflation.
- ETFs & Index Funds: These provide instant diversification across hundreds of companies.
Why It Works:
- When one investment underperforms, others can balance it out.
- Reduces exposure to market crashes or sector-specific downturns.
- Historically, diversified portfolios outperform single-asset investments over time.
🔹 Best for: Investors who want steady growth with lower risk.
