You know the saying “Don’t put all your eggs in one basket?” That applies to investing too. To achieve the same gains with less risk, you’ll want to diversify your stock market investments.
One way to do that is to spread your investments across different companies and different sectors — with a mix of value stocks and growth stocks, and maybe even some international stocks. That way, if one sector declines or one country’s economy faces a recession, you’ll have other investments to help offset your losses.
Some investors focus on index funds, where the stocks are picked for them. Some investors want to pick individual stocks themselves. Others choose a mix. For example, a diversified stock portfolio could look like the image above!