PORTFOLIO DIVERSIFICATION 101: WHY IT’S IMPORTANT TO DIVERSIFY YOUR INVESTMENTS

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“Diversification” is probably one of the first terms you see whenever you read about strategies for smart investing. But are you clear on exactly what it means to have a diversified portfolio and why you should care?

Diversification Defined

Diversifying your investments simply means making sure all of your money isn’t in just one financial “basket.” Instead of investing in a single security, diversified investors put their money into a variety of different stocks, bonds, mutual funds and exchange-traded funds (ETFs).

The idea is that if one of your investments goes down in value, there’s a good chance that another investment will go up in value. In this way, diversification helps you keep your financial life in balance. Diversifying may help you earn a little more on your investments, but the greater value is that diversifying helps reduce your risk of losing money.

READ THE FULL ARTICLE BY DAVID CHISHOLM IN THE 2021 WINTER EDITION OF GAMING & LEISURE MAGAZINE.

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