Diversification

Use this interactive lesson to reinforce diversification within and across asset classes. Students examine how stocks, bonds, and cash serve different purposes in a portfolio; compare diversified funds with individual securities; and consider how investment goals, time horizon, and risk tolerance influence asset allocation. Discuss the benefits and limitations of diversification, emphasizing that it can help manage risk but does not guarantee profits or prevent losses. This lesson provides additional preparation for the MyClassroomInvestor simulation.