Definition

Diversification reduces risk by spreading money across many companies, sectors, and asset classes, so a poor result in any one place has limited impact. A broad index fund is diversified by design. It does not eliminate market risk, but it removes the avoidable risk of betting too much on a single stock.

1. Index Funds: The Beginner's Guide to Passive Investing

   Index funds have outperformed most actively managed funds over every long time horizon. Here is how they work, why they work, and how to use them effectively.
   investing

1. Asset Allocation

   How your portfolio is divided among stocks, bonds, and other assets.
2. Index Fund

   A fund that tracks a market index instead of trying to beat it.
3. Volatility

   How much an investment's price swings up and down over time.