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Diversification is a key strategy in investing that helps reduce risk by spreading investments across various asset classes, sectors, or geographical regions. The idea is to ensure that if one investment performs poorly, others may perform well, balancing out the overall portfolio.
Risk Reduction: Lowers the chance that a single event will severely impact your entire portfolio.
Smoother Returns: In diversified portfolios, different investments may perform well at different times.
Enhanced Growth: While it reduces risk, diversification still allows for potential growth by including assets with varying risk profiles.
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