Category: General Knowledge | Last updated: 2026-09-18

In investing, what is the primary benefit of portfolio diversification?

A) Guaranteeing higher returns
B) Maximizing short-term gains
C) Reducing overall investment risk
D) Eliminating all investment fees

Explanation

Diversification is an investment strategy that mixes a wide variety of investments within a portfolio. The main goal is to minimize risk by spreading investments across various asset classes, industries, and geographic regions so that the negative performance of any single investment has a smaller impact on the overall portfolio.

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