Why is diversification important?

Article author
Alexander G.
  • Updated

Diversification is important because it helps you manage investment risk. By diversifying your portfolio, you can:

  • Lower the impact of any single investment performing poorly
  • Benefit from the performances of different kinds of investments or sectors
  • Potentially improve the risk/reward ratio of your portfolio

Remember — diversification won’t eliminate risk entirely, but it can definitely help manage it.

For information on the Diversification Score, and how it works, please go to this article

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