Diversification is a technique that reduces risk by allocating investments between various financial instruments, industries, and other categories. The goal is to maximize returns by investing in different assets/securities that would each react differently to the same event. Although diversification does not guarantee against loss, it is the most important component of reaching long-range financial goals while minimizing risk.

In this activity, you will discuss the benefits of diversification. Justify the importance of international diversification and discuss international investment vehicles, risk, and valuation of international securities. In your post, state the number of stocks you think you will need to properly diversify your retirement portfolio. Also, discuss the benefits of diversification achieved by investing in mutual funds.

Answer rating: 100% (QA)

Diversification is indeed a fundamental strategy in investment management aimed at mitigating risk and maximizing returns over the long term While diversification within a domestic market can offer so... View the full answer