Diversification
Spreading money across many investments so no single one can wreck you. It is the only free lunch in investing: less risk without necessarily less return.
By Findley's Finance · Last reviewed: September 2026
Why it matters
Diversification works because different assets zig while others zag — when one holding falls, others hold steady or rise, smoothing the ride. It does not prevent losses in a broad crash, and it cannot fix owning 50 versions of the same bet (fifty tech stocks is not diversified). True diversification means different asset classes, sectors, and geographies.