“What is Diversification?”

Diversification is an investment principle designed to help manage risk.  The key to being diversified is to identify investments that may perform differently under various market conditions.  By allocating your money among various types of asset classes such as stocks, bonds, mutual funds and ETFs to name a few, you can reduce your exposure to any one particular asset class or risk.  Being diversified does not guarantee against a loss. As the old saying goes “Don’t put all of your eggs in one baskets?”

Catherine Magaña is a CFP® or CERTIFIED FINANCIAL PLANNER TM in Carlsbad California.

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