How a balanced portfolio can prepare you for volatility
When it comes to investing, diversification is about not having all your eggs in one basket.
Some investments will always be riskier than others, and different sectors and markets experience periods of volatility at different times.
Certain industries that are either very dynamic, like technology, or heavily regulated and scrutinised, like oil and gas, can experience periods of volatility quite frequently.
Similarly, geopolitical events can lead to local or regional uncertainties in different parts of the world, which can cause their own pockets of volatility.
Through diversification, investors can spread the risk associated with specific markets or sectors to reduce the likelihood of concentrated losses.
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