Diversification Principle

The Diversification Principle is an investment strategy that involves spreading your investments across different assets, industries, or geographic regions. This approach reduces risk because if one investment performs poorly, others may perform better, balancing out potential losses. By not putting all your eggs in one basket, you increase the chances of maintaining steady growth and protect your overall portfolio from significant setbacks caused by market fluctuations or specific sector downturns. Essentially, diversification helps manage risk while aiming for more reliable, long-term returns.