Simple explanation
Diversification does not remove risk completely, but it helps reduce the impact of a single poor-performing investment.
Diversification Meaning in Personal Finance
A strategy for reducing risk by spreading money across different assets or sectors.
Diversification
A strategy for reducing risk by spreading money across different assets or sectors.
Related Terms
Asset Allocation
How your money is divided across different asset types like cash, equities, and bonds.
Compound Interest
Interest earned on both the original amount and previously earned interest.
Emergency Fund
A dedicated cash buffer for unexpected expenses or temporary income disruption.
Inflation
The general increase in prices over time, which reduces purchasing power.