Born from a desire to educate the masses on what proper portfolio diversification is and how it can be easily achieved, What Is Investment Diversification? and this Learning Center are never-to-be-completed resources for investors of all skill levels.
The word “diversification” is often misused. No, owning a bunch of altcoins does not yield investment diversification. Neither does owning a bunch of stocks or ETFs yield diversification. Diversification comes from spreading investment into different asset classes, not just different assets.
Investment diversification spreads risk, so a common side effect is reduced volatility and portfolio returns relative to an index (in most cases, the index chosen for performance and volatility comparison is the S&P500). The benefits of portfolio diversification include minimizing the risk of loss, preserving capital, and producing stable returns.
Dig deeper into various asset classes to learn more about building a diversified portfolio.