Diversification Explained

You have heard not to put all your eggs in one basket, which tells you nothing useful. This explains what diversification actually achieves, why ten UK stocks is not really spread at all, and what a genuinely diversified starter portfolio looks like, with a concrete example of how it cuts volatility without killing returns. For someone just beginning to invest.

Explain diversification in investing properly. Not just the eggs-in-one-basket cliche but what it actually achieves, why holding 10 UK stocks is not really diversified, and what a genuinely diversified portfolio looks like for someone just starting out with {INVESTMENT_AMOUNT}.

Use a concrete example to show how diversification reduces volatility without necessarily reducing returns. Tell me the most common diversification mistake beginners make.