Investing is the key to building wealth for most of us. Investment diversification is an important tool to help investors achieve the proper balance between risk and reward. Diversification is an investing strategy used to manage risk. Rather than concentrate money in a single company, industry, sector, or asset, spreading investments across different areas can help reduce the impact of any one investment performing poorly.
In investing, diversification or having a diversified portfolio can go a long way. Learn what diversification is and how to curate a well-diversified portfolio that aligns with your financial goals and risk tolerance. Diversification is widely considered an investing basic. Personal finance courses teach it as gospel, deriding individual stocks as risk bets that could lead to significant losses.
Use our guide to find the best investment strategy based on your goals, time horizon, and tolerance for risk. Charlie Munger's investment approach was predicated on the assumption that good opportunities are few and infrequent. As he once said, "The first rule of investment is don't lose. And the second rule of investment is don't forget the first rule."