A FEW FINAL COMMENTS ON DIVERSIFICATION

Diversification reduces portfolio risk by eliminating unsystematic risk for which investors are not rewarded. Investors are rewarded for taking market risk. Because diversification averages the returns of the assets within the portfolio, it attenuates the potential highs (and lows). Diversification among companies, industries, and asset classes affords the investor the greatest protection against business risk, financial risk, and volatility.

This concludes our section on diversification. To learn more about building the portfolio that is right for you, please review the other investment strategy tutorials.