Course 2010 lessons

Building a diversified portfolio

A practical guide to spreading your money across assets on purpose: what diversification actually protects against, how to size a mix around your goals and risk tolerance, and the habits, like rebalancing and avoiding common mistakes, that keep a portfolio on track for years.

What diversification actually protects you against

There are really two kinds of risk in investing. One is market-wide risk, sometimes called systematic risk, the kind that comes from things like recessions, interest rate changes, or a global crisis, which drags down almost everything at once. No amount of spreading your money out removes this risk, because it touches the whole market.