By Brian M. Reiser Perhaps you’ve heard that portfolio diversification helps protect investors from risk. If so, are you wondering how diversification protects investors?
For starters, we need to understand what we mean by diversifying our portfolio to hedge against risk. Diversifying your portfolio simply means investing in a variety of different types of assets.
Two Different Types of Risk
When you invest in a financial asset, you take on risk. This may sound like a bad thing. But it isn’t. Because without risk, there would be virtually no reward.
The more risk we take on when investing, the higher the potential return we have in the long …read more
