When it comes to investing, one of the key principles is diversification. Diversifying your portfolio means spreading your investments across different asset classes to reduce risk and maximize returns. While there are various asset classes to choose from, one of the most popular and common ones is stocks. In this article, we will explore the role of stocks in a diversified portfolio and why they play such a crucial role in investment strategies.
What are stocks?
Stocks, also known as shares or equities, represent ownership in a company. When you buy stocks, you become a shareholder and have the right to participate in the company’s profits and growth. The value of stocks can fluctuate based on various factors, such as company performance, market conditions, and investor sentiment.
