Investment Diversification

"Don't put all of your eggs in one basket!" is one expression, that when it comes to investing, is very true. Investing is no minor risk-taking venture - so it is important to diversify and extend your
"eggs" or finances in multiple investment directions. The key to successful investing is, in fact, diversification. Like most successful investors, you should build a major investment portfolio with a diversity of investments.

Diversifying your investment portfolio may include investment a multitude of corporations- even foreign ones. The crux of the technique is to invest in several different areas - not just one. It may entail the purchase of bonds, investing in money market accounts, or even in some real property. Research has shown that investors who have diversified portfolios most often see consistent and stable returns, more so then those who just invest in one thing. By investing in several different markets, you are risking less.

Focusing on a cynical point of view, and expecting the worst, if you have invested all of your money in one stock, and that stock's monetary value significantly decreases, you will most likely have lost all of your money. On the opposite end of the spectrum, if you have invested in four different corporations (on different stock markets even), and three are doing well while one plunges, you are still in reasonably good shape.

The splitting of your finances into different corporation stocks while okay, it nowhere near as effective if you can divide your initial investment funds among the various types of investments. As any financial advisor will tell you, you will find that you have a lower risk of losing your money, and over time, you will see better returns if you use all the types of investments available
It takes time to diversify your portfolio if you haven't won the lottery. As one can easily surmise, it all depends on how much you have to initially invest- you may have to start with one type of investment, and
slowly branch out into the multiple types of investments that exist. A fully diversified investment portfolio will contain all the different types of investments: Cash, bonds, stock, real estate, etc.