What is a diversified portfolio?

What is a diversified portfolio?

Posted: 27-Oct-2021

Angelica Leicht | October 27, 2021

When it comes to building the best investment portfolio, you'll often hear that diversification is key. But what does that even mean - and why do you need to bother with it? After all, you already own a wide range of stocks, from that skyrocketing Amazon stock to your Apple and eBay stocks, and you're raking in the profits. What could go wrong?

If you're relying on a portfolio filled with big tech stocks or energy stocks to get you through to retirement - or if you're banking on picking the right stocks forever - you may be in for a surprise during the next market downturn. It's pretty easy to pick the "right" stocks with the market is overvalued. But, when a market correction happens, you're probably going to be wishing you'd paid more attention to the advice about diversification.

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