Diversification is a critical concept in financial literacy, and it involves spreading your money across various places. This strategy can help reduce the concentration of risk, which in turn protects your wealth in tough economic times.

Having your money in various places means that you’re not relying on a single investment or asset to generate income or grow your wealth. For example, if you only have your money in a single stock or property, you’re exposed to the risks associated with that particular investment. If the market or property market crashes, your entire investment could be wiped out.

By diversifying your investments, you can spread your risk across different asset classes and investments, reducing the impact of any one investment performing poorly. For instance, you might have some of your money in a savings account, some in property, some in shares, and some in superannuation. This way, if one investment isn’t performing well, the other investments can help balance out the losses.

Diversification is an essential strategy for protecting and growing your wealth over the long term. It can help you manage risk and maximize returns, ensuring that you’re well-positioned to achieve your financial goals. By spreading your money across various places, you can enjoy greater peace of mind and financial security.