It all comes down to a classic financial principle: don’t put all your eggs in one basket. Diversification is about spreading your investments across various asset classes to manage risk and enhance potential returns.
Here’s a quick overview of how people typically diversify:
Asset Classes
Stocks: Offer strong growth potential, but can be volatile.
Bonds: Generally lower risk, providing steady income.
Real Estate: Physical assets with rental income and value appreciation.
Commodities: Includes gold, oil, etc.—often used as a hedge against inflation.
Cryptocurrency: High-risk, high-reward with growing institutional interest (e.g., Bitcoin).
