Investment Risk

Asset allocation means dividing investments among asset classes such as stocks, bonds, and cash, and the appropriate allocation depends partly on time horizon and risk tolerance.

Diversification means spreading investments across different investments or asset classes to reduce exposure to any one investment or concentration risk.

Diversification can reduce some investment risks but cannot eliminate risks that affect the broader market or economy.

A longer investment time horizon may make it easier for an investor to tolerate market fluctuations, but holding an investment longer does not make a risky investment risk-free.