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Diversification

Diversification, diversification, diversification!

You may have heard the saying, “Don’t put all your eggs in one basket.” Diversifying is based on this idea. In order to reduce your chances of risk, you can put your money into different kinds of investments. It isn’t a good idea to put ALL of your money into one type of investment like one kind of stock, because if the value of that stock goes down, you can lose ALL of your money.

There are different ways you can diversify:

  • Choose different types of investments (stocks, bonds, mutual funds, etc.)
  • Pick more than one investment
  • Consider something other than individual stocks. Try mutual funds, an investment that automatically diversifies your money.
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