There’s a famous investing proverb that says you must never put all your eggs in one basket. It makes sense. If you drop that one basket, you can lose ALL your eggs. Similar to that, it’s wise to NOT put all your cash in just one investment. If that particular investment fails, you can lose a LOT of money.
So how do you protect your investment money? Simple. You must learn to diversify your portfolio! Instead of putting ALL your money in just ONE investment (one company, one kind of investment, etc.), you have to invest in MANY!
Here are three simple ways to use diversification to protect your investment money.