Diversification: Your best defense against risk
Diversification means distributing your investments across different assets, sectors, and geographies to reduce your portfolio's overall risk.
The diversification principle is summarized as 'don't put all your eggs in one basket.'
Effective diversification requires that chosen assets don't move in the same direction.
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Frequently asked questions
How many assets do I need to be diversified?
With 15-20 stocks from different sectors, you get most of the benefits.
Are investment funds already diversified?
Yes, especially index funds.