What is diversification in investing ?

Diversification in investing is a strategy used to spread investments across different asset classes, such as stocks, bonds, and real estate, to reduce risk. The goal is to avoid putting all your money into one type of investment, which could perform poorly. By holding a mix of assets that behave differently in various market conditions, the overall risk of the portfolio is lowered. This helps balance out losses in one area with gains in another. While diversification doesn’t eliminate risk, it helps manage it, making it an essential approach for long-term, balanced investment growth.