Diversification is a strategy used to reduce risk by investing in a variety of assets. This can be done by investing in different asset classes, such as stocks, bonds, and real estate. It can also be done by investing in different sectors of the economy, such as technology, healthcare, and consumer goods.
Diversification is important because it can help to reduce the risk of losing money. If one asset class or sector performs poorly, the others may still perform well. This can help to smooth out returns over time.
