One of the most important principles in investing is to not “put all your eggs in one basket.” A well-balanced portfolio spreads out risk while maximizing the potential for returns.
This FINRA resource offers a comprehensive guide to asset allocation and diversification. It explains how spreading your investments across different asset classes, such as stocks, bonds, and cash equivalents, helps manage risk by reducing your exposure to any single market event.
It also emphasizes the importance of diversification within asset classes, such as holding stocks in different industries or geographic regions, and provides strategies for rebalancing your portfolio to maintain your target allocation over time. These approaches are crucial for managing risk while positioning your portfolio for long-term growth.
