Diversification

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Diverisification is defined as an investment strategy where an investor purchases many types of assets (real estate, stocks, cash, cryptocurrency) as a way to control the impact of any single investment.

Many investors are big fans of diversification, but like anything it can be overdone. By spreading yourself too thin across many different investments, you have a low risk of losing everything, but you also will not make huge profits.

If at the beginning of Facebook, Mark Zuckerberg, the founder had asked you for $5.000 as an investment, would you do it? Of course you would.

As a diversified investor, you might only want to give him $100-500 so you could avoid risking all of your money.

In other words, diversification works well with investments that you have little knowledge or understanding in.

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