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Diversification

Spreading money across different assets so no single holding can sink the portfolio.

ETFs & PortfolioBeginner

Definition

Owning many companies in different sectors, countries and asset classes reduces the risk of any one of them, since they do not all fail together. It lowers company-specific risk but not market risk.

Watch out for

In a broad sell-off many assets fall at once. Owning many stocks is not diversified if they are all in one theme.

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