Risk & Diversification

Every investment has risk, but what does that actually mean? 🤔

💡Risk = how much you could potentially lose on an investment

Let's say you have $1000 to invest in the stock market and you put it all in Company A 💰

If Company A goes out of business, you’d lose all $1000 😨

A better option may be to invest in a few different stocks 💡

This could look like investing $200 in 5 different companies. 🤔

This way, you don't lose all your money if one of the companies fails 📊

The concept of spreading out your investments is called diversification 💡

By getting different stocks, your overall portfolio is less exposed to risk 💪

This is where the phrase “Don’t put all of your eggs in one basket” comes from! 🧺

You can diversify your investments by purchasing stock from different companies and even across different industries 🌍

So, now you know that you can diversify, or spread out your investments over various companies and industries to reduce risk 💪🤓