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Glossary

What is Diversification?

Diversification means not putting all your eggs in one basket.

The simple explanation

Spreading money across different companies, industries and types of investments means one bad outcome hurts less. It does not remove risk, but it softens it.

An example

Owning stocks in tech, healthcare, banking and food is more diversified than owning five tech stocks.

Why it matters

It is one of the most widely repeated ideas in investing.

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Related terms

Educational information, not financial advice.