Written by Jessica Duquette
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You’re an avid player of the stock market. If you’re successful, chances are you rely on diversification to keep a positive portfolio. What is diversification and why is it crucial to making money in the stock market?

Reduce Risk

Diversification is a way of distributing your money throughout various stocks. Rather than putting all your money in one company, you’ve split your total investment among six companies. What is the benefit of doing this?

Well for starters, it’s a lot less risk. If you had 20,000 dollars to invest and you dumped it all into one company, there is a chance that this company won’t do well. Should this happen, your entire investment just went down the drain.

Thriving Investments

Now by taking your 20,000 dollars, splitting it up several ways and investing it into a few different companies, your risk decreases. While you lessen the amount of return from each company, your chances of losing all your money lessen as well. Keeping your long term goals in mind, this concept will help build sturdy and thriving investments.

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