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RE: Diversification and the Importance of Understanding Its Meaning/eng-spn

in TradFi2 months ago

Diversification involves investing in a wider range of instruments, but it doesn't necessarily reduce your risk exposure. For example, you might have 100% invested in US Treasury bonds and diversify by selling half of them to buy cryptocurrency. One thing is certain: your investment portfolio will be significantly riskier.
Don't forget the financial principle that the greater the risk taken, the greater the expected return.