Importance of diversifying the investment
Diversifying this $ 100,000 investment will involve allocating funds to a number of financial instruments. The objective of this diversification is to maximize returns from a number of channels, each of which would react differently to a similar event. Diversification of the $ 100,000 investment would enable me to reach my long term financial goals of financial stability.
The major importance of diversifying this investment is that I would reduce the unsystematic risk (Kennon, 2010). The business and financial risks on my investment can be diversified. If there are events such as business failure in my company, I would not lose ...