What is Diversification?

Diversification is an investment strategy that by investing in different asset Category reduce overall risk. By diversifying your portfolio, you reduce the risk that a single event or a failed investment will have a significant impact.

Where have you heard about diversification?

It is common for companies in the news to "decentralize products and services" by offering new products, services or platforms ". For the same reason, the more diversified the product and service, the lower the risk.

What you need to know about diversification...

You can diversify your portfolio by investing in different asset classes (e. G. Bonds, funds, equities, derivatives) and different industries.

The following are examples of diversification and their importance. Let's say you're interested in the automotive industry and know it well enough to invest in a number of car companies. If public transport were to be completely free, the event would damage the auto industry and thus your entire portfolio. But if you invest in cars, planes, food and real estate at the same time, the event will not have a serious impact on your portfolio.