Diversification

In by Kristia van Heerden

This is a way to manage risk when we invest. It means we spread our financial interests across a number of investments. We can diversify by asset class, by having an emergency fund, share investments and property. We can diversify within an asset class, for example by investing in more than one company or an ETF that offers broad-market exposure.

These posts discuss this in more detail:

OUTstanding money: One share isn’t enough

Podcast: DIY diversification

Related terms in this Glossary:

concentration risk