minimizing total investment risk by putting invested money in several different classes of investments, such as stocks, bonds, money market instruments, and real estate, or in stocks of different industries rather than putting all invested money in one type of asset or one stock
diversified holdings diversified stock diversified fund investment diversification
As an example, historically, when the value of stocks has dropped sharply, quality bonds have risen (or at least not fallen as sharply). Accordingly, owning both stocks and bonds is generally thought to decrease the risk from a drop in stock values. Similarly, owning many stocks from many industries is generally thought to be less risky than owning all of one stock or all stocks in a single industry.