Diversification is a strategy involving investing in different assets or sectors to reduce risk and increase profit opportunities.
It’s akin to having “eggs in different baskets.” By diversifying, one doesn’t rely on a single asset or company, thereby safeguarding capital in case one doesn’t perform well.
For instance, instead of investing all money in one stock, it can be spread across stocks of different companies, bonds, real estate, etc. This approach aims to minimize risk and capitalize on potential gains in various areas.
