Why is it worth diversifying your investments?

It is worth diversifying your investments as there are completely different risks associated with owning government or corporate bonds, emerging market stocks or cryptocurrencies. Each of these assets has pros and cons and is divided into more or less safe. In the event of problems in one area, we will not lose all capital and are more likely to remain calm, waiting for the right moment to leave.
Financial markets are characterized by a cyclical nature, i.e. the alternating periods of boom and bust lasting from several to several years, depending on the type of market and the macroeconomic situation. For this reason, better returns on investment are often achieved by patient, long-term investors, because even in the event of a loss on a given asset, they can still make up for it after the next bull market. A completely different pressure is on a person who has put all their money into a risky investment and cannot take it out without a large loss than on someone who has invested 10 percent. its portfolio, but the remaining 90 percent. still profitable.
Especially a beginner should not have more than 5-10 percent. risky assets (I mean, first of all, cryptocurrencies and derivatives, e.g. futures and options), and only on the condition that she counts on their total loss and has carefully read the available information about them. Too often, inexperienced investors succumb to greed and end up making many wrong decisions. In this way, they become capital givers for more experienced players on the market. Therefore, for their own safety and mental balance, they should not throw all their money into risky assets, because in the event of a total loss of funds, they will need time to rebuild capital and start over.
Everyone should assess their level of experience and risk appetite for themselves. And above all, you should educate yourself on an ongoing basis and invest only as much as you can lose, remembering that it is only money, and our health and mental balance are much more important than them.

Diversification of investments is a key element of effective investment portfolio management. By diversifying their investments, one can minimize the risk associated with potential losses. If one investment goes downhill, others can still bring profits, reducing the overall risk of capital loss. Diversification also allows for achieving better stability of the investment portfolio. By owning different types of assets, such as stocks, bonds, real estate, or commodities, one can mitigate the impact of sudden drops in the value of individual investments on the entire portfolio. It is also worth noting that diversification of investments can help achieve better results through optimal use of different asset classes and financial instruments. This can increase potential profits while maintaining an appropriate level of risk.