What does it mean to 'diversify' your investment portfolio?

Question

A) Focus on a single investment

B) Spread investments across various assets

C) Only invest in high-risk assets

D) Only invest in low-risk assets

Answer 1

B) Spread investments across various assets

Diversifying your investment portfolio means allocating your investments across a variety of assets to reduce risk. By spreading your investments, you can help protect your portfolio from significant losses that could occur from any single investment or market sector.