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Explain what diversification of assets means. Then explain why it is important to diversity.  Finally, create an imaginary investment portfolio for yourself or someone you know personally. Include at least one specific example of each:high, medium, and low risk investments.  Explain your choices.

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Risk is always inevitable when it comes to money. Of course the greater risk you take the bigger the potential reward. But that being said there are some ways to lower risk in case you wanna play things safe. Like diversifying. Basically, diversifying is spreading your money to help reduce risk. “One way to minimize the risk of investing money is to diversify – spreading your money across different investments means the likelihood of losing all your capital is significantly decreased. It is important to remember that risk can be reduced, but not eliminated altogether by diversification.” (Risk Management & Insurance, 12)

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Diversifying is pretty important for those who are in pretty high risk investments. Generally a high risk investor is a professional who knows what’s he’s doing. Usually someone with high income. Then there are medium risk investors. Usually they’re near retirement and given the time they have left they was lower their risk a bit, this is where you would diversify investments the most. Low risk is a person who’s starting to pretty much approach retirement or are already retired. Lose risk investments are in a savings account.

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Given that I’d work as a VFX artist, my money would be coming at a reasonable rate if not high. Considering I’m at my peak in earnings, I should start diversifying my money but there are 2 things I’ve got to consider. “The first is the number of years until you expect to need the money—also known as your time horizon.
The second is your attitude toward risk—also known as your risk tolerance.” (Risk Management & Insurance, 13) If I’m at about my 30s at this point then I got at least 25 years left to consider retirement and I’d be at a medium risk investment so I would try to lower myself to a low risk.