Diversification is a critical strategy in the realm of investment, acting as a safeguard against the unpredictability of financial markets. By spreading investments across a diverse range of assets such as stocks, bonds, and commodities, investors can mitigate risks and enhance the potential for returns. The rationale behind diversification is rooted in the adage, "Don't put all your eggs in one basket." By investing in a variety of assets, the impact of a poor-performing investment can be cushioned by others that may be performing well. This approach not only stabilizes the investment portfolio but also paves the way for achieving long-term financial goals with a balanced risk-reward ratio.
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