Investment Diversification Portfolio

Investment diversification is the strategic allocation of capital across multiple assets, sectors, and geographies such that losses in one area are cushioned by gains elsewhere. A diversified portfolio typically includes stocks (growth), bonds (stability), real estate, commodities, and alternatives, each chosen because they behave differently under various economic conditions. The core principle: a portfolio of imperfectly correlated assets has lower total risk than the sum of its parts. A 60% stock / 40% bond portfolio has weathered every bear market better than 100% stocks, despite being "only" 60% stocks.