Final answer:
Purchasing stocks in different industries, bonds, and several mutual funds would be a way to diversify your portfolio.
Step-by-step explanation:
Diversify
Purchasing stocks in different industries, bonds, and several mutual funds would be a way to diversify your portfolio. Diversification involves spreading out investments across various assets and industries to reduce risk. This strategy helps to protect against the risk of losing money on a single investment, as different sectors may perform differently over time.
For example, let's say you invest all your money in a single tech company. If that company experiences a downturn or other negative events, your portfolio would be heavily impacted. However, if you spread your investments across different industries and types of assets, the negative impact on your portfolio would be minimized in case one investment performs poorly.