Diversification means spreading money across different assets so that no single loss destroys the portfolio. Heres how to do it:
- By Sector Mix healthcare like Pfizer.
- By Region Hold U.S. firms such as Apple, European ones like Volkswagen, and Asian firms like Toyota.
- By Asset Type Combine real estate investment trusts.
- By Company Size Balance large-cap stable firms like Procter & Gamble with small-cap growth firms like Zoom or Shopify.
- By Theme Consider industries like renewable energy.
Example diversified portfolio:
- 30% in S&P 500 ETF (large-cap exposure)
- 20% in international ETF (Asia, Europe)
- 20% in healthcare stocks like Moderna or Johnson & Johnson
- 20% in tech giants like Google and Nvidia
- 10% in energy like Chevron or NextEra
Diversification helps reduce risk and increases chances of steady returns over time. Its one of the most important rules investing guide for Shopify beginners starting in the stock market.
