Diversification is a foundational principle of a resilient investment strategy. By spreading your investments across various asset classes, you reduce the risk of a significant loss in your portfolio.
- Asset Allocation: Balance your investments across different classes, such as stocks, bonds, real estate, and commodities. Each asset class reacts differently to economic cycles, providing stability to your portfolio during turbulent times.
- Sector Diversification: Apart from diversifying asset types, it's crucial to spread your investments across various industries. This shields your portfolio from sector-specific risks.