The Money PagesWhy Not Put All Your Eggs in One Basket?
An egg basket helps explain why depending on one investment can be risky.
Picture six eggs in one basket. If the handle breaks, all six could smash.
An investment is something you put money into, hoping it will grow in value. It can also lose value.
Someone who invests only in one company is tied to how that company does.
Diversification means spreading money across different investments. Some may do well when others don't.
It doesn't make investing safe from every loss. Different investments can lose value at the same time. Six very similar companies may also share the same risks.
The eggs explain an idea. They aren't a plan telling you what to buy.
Money words
Diversification
Spreading money across different investments instead of relying on just one.
Different investments can spread risk. They can still lose money, even at the same time.
