What Is Diversification? | Fidelity Investments?

Diversification is when you spread out your money into different places so that if one doesn’t do well, others might still do okay.

Imagine you have a piggy bank with all your toys in it, if one toy breaks, you lose everything. But if you spread your toys into different piggy banks, like one for cars, one for blocks, and one for dolls, then even if the car piggy bank gets broken, the block and doll ones might still be fine.

Diversification is like having a team of friends helping you. If one friend loses their allowance money, another friend might win a prize or get a gift card, they all help each other out. So instead of relying on just one thing to make you happy (or rich), you have many things working together.

Next time you get your allowance, try splitting it into different parts: some for candy, some for games, and some for saving up for a bigger toy. That way, even if one part runs out faster than the others, you still have more to play with!