Diversified Portfolio
A diversified portfolio spreads your money across different companies, sectors, countries and asset types.
1 min read Learning to Invest
What it means
A diversified portfolio spreads your money across different companies, sectors, countries and asset types. The aim is to reduce the impact that any single investment has on your overall results.
Example
Instead of putting all your money into UK technology companies, you invest globally across thousands of businesses and hold some bonds as well.
Why it matters
A diversified portfolio reduces concentration risk but can't eliminate investment risk.
Diversification is about owning investments that behave differently, not simply owning more investments.
Does diversification guarantee I won't lose money?
No. A diversified portfolio can still fall in value, especially when markets decline broadly.