Portfolios 4 min read
Diversification: spread it out
Don't put all your eggs in one basket — especially if that basket is one hyped-up stock.
What a portfolio is
Your portfolio is everything you invest in, all together. A good portfolio is built so one bad pick can't wreck it.
Diversify across…
Many companies (not just one), many industries (not just tech), different asset types (stocks and bonds), and different countries.
A total market fund already does a lot of this for you in one purchase.
Concentration risk
Big companies fail too. Diversification means you don't need to predict which ones will.
Real example
Two friends, one bad year
Noah puts $1,000 into one popular stock. Zoe puts $1,000 into a total market fund. Noah's company has a scandal.
- Noah's stock
- −60% → $400
- Zoe's fund
- +8% → $1,080
- Companies Zoe owns
- Thousands
- Companies Noah owns
- 1
Remember this
- A portfolio is all your investments together.
- Spread across companies, industries, asset types and countries.
- Broad funds give you instant diversification.
Quick quiz
Did it click?
Question 1 of 30 correct
Diversification means…
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