Putting money into more than one kind of investment at a time is called ______.

Question:- Putting money into more than one kind of investment at a time is called ______.

Answer. “diversification”.

The arrangement of investing funds in several kinds of investments at the same time is known as diversification. Portfolio diversification is an important element of risk management that focuses on dispersing an investor’s capital among the various classes of assets, industries or localities to minimize the overall risk associated with investment. The general idea behind diversification of investments is to try and avoid focusing huge percentages of gross on one investment and subsequently losing big money due to some negative occurrences in the market or some other related mishap; instead, investors spread the risks around other areas, where they may possibly get gains to counter the losses made in a particular investment.

Leveraging diversification helps to minimize the risks implicated by individual investment and enables an investor to gain better returns per unit of risk in the long run. The idea is founded within the fact that depending on other industries, categories, or areas, performances are not always uniformly and to the same degree aligned, thus acting as a protection in case of underperformance of any particular asset. Indeed, the strategy of diversifying investments is considered to be most effective when it comes to minimizing risks involved in investing and the possibilities of losing a great amount of money.