Diversification is spreading your money across different types of investments that have different levels of risk and return. Diversification helps reduce your overall risk by minimizing your exposure to any single investment that may perform poorly or fail. Diversification also helps increase your potential return by capturing opportunities from different markets or sectors.
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In this video, William Ackman, a billionaire investor and founder of Pershing Square Capital Management, explains the basics of finance and investing.
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The key to everyday investing is diversification, which means owning different types of investments to spread out the risk. You definitely want to own stock index funds because stocks over time have always offered the best return.
You need investments that can do well when...
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