Answer:
1. Minimizing Risk, 2. Generate profits 3. Preservation of Capital:
Step-by-step explanation:
1. Minimizing Risk
Every investment opportunity has its share of risk. Having a diversified portfolio shield from unforeseen market events. If one class of investments perform poorly, other groups may do well, thereby reducing the loss impact.
2. Generate Profits
Diversification means investors will be relying on several investment tools for returns. Some markets may not respond as the investor expects. Should some markets not do well, an investor will be assured of profits from the rest.
3. Preservation of Capital
The main aim of investing is to make profits, preserving capital is as equally important. Every investor must be careful not to lose all his capital. Having a diversified portfolio helps protect wealth.