Understanding the Basics of Diversification

Diversification is a cornerstone of smart investing. It’s the strategy of spreading your investments across different asset classes, sectors, and geographies to reduce your overall risk. Instead of putting all your eggs in one basket, you’re strategically distributing them across several, minimizing the impact if one basket takes a hit. This doesn’t guarantee profits, but it significantly lowers the chance of catastrophic losses. The key is thoughtful diversification, not simply spreading your money randomly.

Asset Allocation: The Foundation of Your Strategy

Before you start picking individual stocks, you need a solid asset allocation plan. This