Diversify your investments to reduce risk from "summary" of The Intelligent Investor Rev Ed. by Benjamin Graham
Diversification is a key principle for any prudent investor. By spreading your investments across a variety of different assets, you can reduce the overall risk in your portfolio. This is because different types of investments tend to behave differently in various market conditions. For example, stocks may perform well when the economy is booming, but bonds may be a better option during times of economic uncertainty.
When you diversify your investments, you are essentially hedging your bets. If one asset class underperforms, you have others that may help offset those losses. This can help protect your overall investment portfolio from significant downturns and volatility in the market. It is important to note that diversification does not guarantee profits or prevent losses, but it does help manage risk in a more strategic way.
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