28. Diversifying

How can you lessen the risk of losing your money?

By diversifying your portfolio. This means spreading your investment over a range of companies and sectors. After all, why put all your eggs in one basket when there are so many great companies to invest in.

What are a few ways you can diversify your portfolio?

1. *Market Cap* - cover the risk of investing in small cap companies by diversifying with bigger, safer, investments. 2. *Sectors* - spread your investment over varying sectors to ensure a major economic trend or geopolitical event can't hurt your entire portfolio. 3. *Geography* - you can protect yourself by investing in companies that have exposure to foreign markets. 4. Asset Classes - as well as stocks, you can spread your risk by investing in things like real estate or bonds (younger investors should look to stocks as their main source of investment, simply because they provide the greatest returns.l).

Spreading yourself too thin will lead to average returns. You should aim to own around __________ different companies within your first year of investing.

12

What does diversifying mean?

Diversifying means spreading the risk across a number of investments.

Remember that no matter how much research you put into an investment, there's always...

a risk you'll lose your money.