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Diversify your investments from "summary" of Know Your Money by

When it comes to investing, it's important to spread out your money across different types of investments. This is known as diversification. By diversifying your investments, you can reduce the overall risk in your portfolio. Imagine putting all your eggs in one basket – if that basket falls, you lose all your eggs. But if you spread your eggs into different baskets, even if one falls, you still have eggs left in the other baskets. The same principle applies to investing. Diversification helps protect your investments from market volatility. Different types of investments may perform differently under various market conditions. For example, stocks may go up when bonds go down, and vice versa. By holding a mix of assets, you can potentially offset losses in one investment with gains in another. Additionally, diversification can help you achieve a more consistent return over time. While some investments may be performing well at certain times, others may not be doing as well. By diversifying, you can smooth out the ups and downs in your portfolio and potentially achieve more stable returns. It's important to note that diversification does not guarantee profits or protect against losses. However, it can help reduce the risk of losing a significant portion of your investment. By spreading your money across different types of investments, you can potentially improve your chances of achieving your financial goals while managing risk.
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