The best reason to take the trouble to diversify your investments is that holding a wide variety of assets can significantly reduce the risk of losses.
The idea is to ensure no holding is substantial enough to torpedo your returns if it does badly.
Taking a balanced approach to what you buy will also make your portfolio less volatile because when one asset is performing poorly, this will generally be offset by another that is doing better.
But diversifying your portfolio is not just about the split between assets like stocks, corporate and government bonds, property, commodities like gold, and so on.
You also need to look at spreading investments geographically and between types of markets, like developed, emerging and those somewhere between them.
