Ask Leo: Does diversification help to reduce a total loss of asset

Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio.
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Diversification really help an investor to reduce its risk from making a total loss over its asset. Such investor diversify into different class of investment or wide range of an investment so as to reduce the volatility or the down trend in price on only one particular asset which can cause a total loss to an investor.

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By diversifying, it helps to correct , if one asset is going up in price the other one is going down in price it will help to correct the other one that is going down so that such an investor will not make a total loss.
Through diversification it helps an investor with long term investment to have higher returns.
It must be note also that when diversifying make a proper research before diversifying so as not make all asset to be at a total loss. Make a proper research will help to make a wise choice and decision before diversifying.

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