Cher Bourg Stocks

Portfolio Diversification

Portfolio diversification is an investment strategy that involves spreading investments across various assets to reduce risk. The primary goal of diversification is to minimize the impact of any single investment’s poor performance on the overall portfolio. By investing in a mix of asset classes, such as stocks, bonds, real estate, and commodities, an investor can balance potential returns with risk. The idea is that different assets often react differently to market conditions; when one asset class may perform poorly, another may perform well, thereby stabilizing overall returns. Diversification does not eliminate risk entirely but can significantly lower it compared to investing in a single asset or a narrow range of assets. It is a fundamental principle of investing that helps in achieving long-term financial goals while managing volatility.