ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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You put your money in one place
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You give all your money away
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You don’t save any money
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You put your money into many different types of investments
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Detailed explanation-1: -Diversification is a strategy that mixes a wide variety of investments within a portfolio in an attempt to reduce portfolio risk. Diversification is most often done by investing in different asset classes such as stocks, bonds, real estate, or cryptocurrency.
Detailed explanation-2: -Diversification is the spreading of your investments both among and within different asset classes. And rebalancing means making regular adjustments to ensure you’re still hitting your target allocation over time. All are important tools in managing investment risk. These strategies are all about variety.
Detailed explanation-3: -Consider Index or Bond Funds Investing in securities that track various indexes makes a wonderful long-term diversification investment for your portfolio. By adding some fixed-income solutions, you are further hedging your portfolio against market volatility and uncertainty.
Detailed explanation-4: -In investing, diversification is used to reduce your overall risk by distributing your wealth among different investments. You safeguard your investments from economic uncertainty by not putting all your goods in one bucket. There are numerous options to help you diversify your financial accounts.
Detailed explanation-5: -Diversification is a technique that reduces risk by allocating investments across various financial instruments, industries, and other categories. It aims to minimize losses by investing in different areas that would each react differently to the same event.