Diversification

Definition: Diversification is a strategy to reduce risk by spreading investments, income sources, or efforts across multiple areas. In finance, it involves allocating assets across different classes, industries, or geographic regions. In income management, it means developing multiple streams of income to avoid reliance on a single source.

Example:

• Investment Diversification: A portfolio that includes stocks, bonds, real estate, and mutual funds minimizes the impact of poor performance in any one area.
• Income Stream Diversification: A freelancer who earns from client work, an online course, and royalties from a book is diversifying their income.