Question

In order to increase your chance of a better return, you would have to ________?

1) Invest in high-risk assets
2) Diversify your investment portfolio
3) Invest in low-risk assets
4) Keep all your money in a single investment

Answer 1

To increase your chances of better return, diversify your investment portfolio, balancing high-risk and low-risk assets, and avoiding putting all your money in a single investment. Option 2

Step-by-step explanation:

To increase your chance of a better return, you would have to diversify your investment portfolio. Diversification is the strategy of spreading investments across a wide range of companies to mitigate risk. Investing in high-risk assets like stocks might offer a higher average return but comes with the possibility of greater losses.

Conversely, low-risk assets such as bank accounts offer security but typically yield lower returns. It's generally not advisable to keep all your money in a single investment because it exposes you to the potential downfall of just one entity or market fluctuation.

The concept of diversification follows the old proverb, "Don't put all your eggs in one basket." By investing in a mix of assets, including stocks, bonds, and potentially mutual funds, the extreme ups and downs can cancel each other out over time, leading to a more stable overall return on your investment portfolio. Option 2