Definition
Spreading your investments across various asset classes to reduce risk. It’s like not putting all your eggs in one basket.
What to consider
- Spread your investments to reduce overall risk.
- A mix of asset types can protect you during market ups and downs.
- Regularly review your portfolio to ensure balance.
Real world scenarios
- Yara invests in various sectors—tech, healthcare, and energy—to limit losses if one industry underperforms.
- Tim’s portfolio contains both domestic and international funds, reducing the impact of any single country's market swings.
- Kiko regularly reviews her diversified approach, fine-tuning asset mixes to match her changing risk tolerance.
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