The True Meaning of Diversification
Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio. The goal is to ensure that one poor performance doesn't destroy your entire assets.
Popular Diversification Instruments
- Bonds & Government Securities: Provide fixed returns with low risk.
- Gold: Acts as a safe haven asset during high inflation.
- Mutual Funds: Facilitate diversification through professional investment managers.
An ideal portfolio is typically tailored to the risk profile and financial goals of each individual, rather than just following trends.