Glossary · Risk & Strategy
Diversification
Spreading investments across assets to reduce risk.
Diversification means not putting all your money in one stock, sector, or asset class. When holdings respond differently to the same news, a hit to one piece is less likely to devastate the whole portfolio.
True diversification looks at how assets move together, not just at raw count. Twenty tech stocks may still behave like one bet. Mixing stocks, bonds, geographies, and styles is a more classic approach for beginners.
Example
Instead of holding only one company, you own a broad stock ETF plus a bond ETF so a single earnings miss cannot wipe out the entire account overnight.