Finance Monthly - May 2022

59 Finance Monthly. Inve s tmen t Now, more so than ever before, the importance of portfolio diversification can’t be overstated. Why the Recent Impact of Inflation Has Shown That Diversification is Essential Portfolio o diversify your stocks and bonds is to undergo an effective risk management strategy that enables you to invest in a range of different financial assets which can play a key role in reducing the risk of damaging losses occurring. This can be extremely beneficial during times of high inflation like that of today. As the soaring cost of living is leading to more investor sell-offs of previously strong stocks, diversification helps to ensure that all your eggs are kept in different baskets and are thus stronger during a downturn. As the record-breaking inflation of today is being impacted by multiple factors surrounding the COVID-19 pandemic and geopolitical tensions, the stocks that are being impacted by the downturn in unprecedented ways – making a diversified strategy far safer over a long-term basis. The Importance of Diversification Let’s imagine that you decide to buy stocks in an industry that you believe will have high potential in

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