How can individuals diversify their investment portfolios?.

Key Facts

• Diversification can reduce portfolio volatility by up to 30%.
• Investors should consider a mix of equities, bonds, and alternative assets.
• Studies show that portfolios with 15-20 different assets are generally optimal.
• Geographic and sector diversification further enhances protection against market fluctuations.

Examples or Use Cases

• An investor could allocate 60% to stocks, 30% to bonds, and 10% to real estate.
• Using ETFs or mutual funds allows easy diversification in a single investment.

FAQs

Why is diversification important? Diversification helps to spread risk, which can lead to more stable returns over time.

How many different assets should I have? Aiming for 15-20 assets in various categories is generally advisable for most investors.