Diversifying is one of the most basic rules when investing.
It's the "don't put all your eggs in one basket" strategy. The basic thought process behind diversifying your investments is that if you spread your investments around, you'll reduce the risk of losing money, because when one of your holdings moves lower, another is likely moving higher. For example, bonds usually move higher when stocks move lower, and vice versa.
We know we are supposed to diversify, but a lot of investors don't do it very well. Many account owners think their portfolios are diversified when they aren't. Here are some of the most common diversification mistakes investors make.