Different investments rise and fall at different times.
Direct answer
Diversification means spreading your money across different types of assets, industries and regions. If one falls, others may hold up, which smooths the ride. It reduces the risk of a single investment hurting you badly, but it cannot remove the risk of the whole market falling.
Ways to diversify
- Across asset types: shares, bonds, cash, property.
- Across industries: technology, health, energy and so on.
- Across regions: domestic and international.
- Through funds that hold many holdings.
What it cannot do
It cannot guarantee a profit or prevent losses in a broad downturn.
Mistakes
- Holding lots of similar assets and calling it diversified.
- Putting most of your savings in your employer's shares.
- Chasing last year's best performer.
Where Teyro fits
Teyro's Money Habits That Build Long-Term Wealth course turns this into short lessons you can play in a few minutes a day. It has 50 lessons, and you can start free.
The bottom line
Spread risk deliberately and review it. This is general education, not advice.
This is general education, not personal financial advice.
