What effect will diversifying your portfolio have on your returns?

Diversifying your portfolio can help mitigate risk by spreading investments across various asset classes, sectors, or geographies. This strategy can reduce the impact of poor performance from any single investment, leading to more stable returns over time. While it may limit the potential for extreme gains from high-performing assets, it generally enhances the risk-return profile, making it a prudent approach for long-term investors. Overall, diversification aims to achieve a balance between risk and return.