DISCLAIMER: This article is not an investment advice. You should do your own research before investing money. All investments involve risk of losing money.
Hey what’s up people, Yuriy Shinok here broadcasting for the world. And today’s topic is DIVERSIFICATION.
I would like to thank the guy that introduced me to some nice investment platforms and he was also who told me to ALWAYS DIVERSIFY. His name is Jacob Mikolajewicz and I would like to thank Jacob by dedicating this article to him.
What Is Diversification?
If you’re asking yourself what diversification is you should remember the old saying that says like this “don’t put all the eggs in the same basket”.
Diversification is about investing your money in different companies, platforms or assets.
Let’s say right now you have 5.000 $ in your hands and you want to invest this money in cryptocurrencies. In this case to diversify is to buy 1.000 $ of Bitcoin, 1.000 $ of Ethereum, 1.000 $ of Litecoin, 1.000 $ of Ripple and 1.000 $ of Dash.
In this case you’re diversifying in 5 different cryptos and by doing it you “multiply your possibilities”. In this case if some cryptos go down and some go up you’re still in the game and basically you’re reducing the risk by diversifying.
Now let’s see another example of diversification.
Let’s say you have 5.000 $ in your hands again and now you want to invest in something else. OK, here you could diversify in different assets like gold, silver, platinum, oil and corn. In this case if you want to diversify you can buy 1.000 $ of gold, 1.000 $ of silver, 1.000 $ of platinum, 1.000 $ of oil and 1.000 $ of corn.
This would be another example of a diversified portfolio.
Why Diversification Is Important?
The diversification helps you to minimize the risk while investing your money.
The principle behind diversification is to not put all the eggs in the same basket.
To diversify means to invest in different companies or different assets. This way, if something goes wrong with some company or some asset you still have your other companies and other assets.
Diversification is what smart investors do.
And now YOU know it.
So now you’re a smart investor too.