Diversification

Helps you to avoid putting all of your eggs into one basket, only to drop the basket and break them all. Like in the proverb, distributing your “eggs,” or investments, around into different “baskets,” or investments, reduces your risk of breakage, or in this case—breaking the bank! For example, let’s say you put 80% of your investing money into stocks. Don’t go all in on one stock; instead, invest in a variety of them, so if that one stock tanks it doesn’t tank your entire portfolio. (See also: Asset Allocation)

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2017-12-12T20:13:34+00:00

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