Diversification is a fancy word for not putting all your eggs in one basket. By investing across several types of investment vehicles, you can reduce your risk. Holding a portfolio with various classes of assets, will allow you to earn a higher yield with less risk, than owning only one individual security.

Your asset allocation, or mix of investments, will play a major role in the long-term growth and stability of your portfolio. There are many types of stocks, bonds, funds, and cash vehicles that one can use to achieve their goals.

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