Diversification is a key concept when it comes to investing. Find out what it means in this short jargon buster video. Also our guest blogger Faith Archer explains what diversification means to her in post about packing for a summer holiday.

Diversification video image
Video transcript

Diversification is the key way to manage investment risk and is based on the idea of using the gains in some assets to cushion the potential fall in value of others.

You can do this in a number of ways: holding a portfolio of shares rather than a single share; holding a number of different portfolios rather than a single fund; and holding funds across a number of different asset classes, geographies or investment styles.