Why is diversifying investments important?

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by (120 points)
What are the main reasons for portfolio diversification among investors?

1 Answer

+1 vote
by (440 points)
One of the primary philosophies behind any investment is ‘don’t put all your eggs in one basket’ and this is even more crucial for those investing in stocks or bonds. An investor can combine a number of more uncertain investments with less risky ones and balance their portfolio to avoid or at least reduce the risk of severe downdrafts and increase the probability of satisfactory returns.
by (110 points)
Nice! Easily understood explanation of one of the most difficult and intimidating subjects.
by (110 points)
Basically don't put all your eggs in 1 basket
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