You can reduce your investment risk most effectively through

Question

Quizplus · Accepted Answer

Asset allocation is the most effective way to reduce investment risk because it involves spreading your investments across different asset classes (such as stocks, bonds, and real estate) and diversifying within each class to minimize volatility. This strategy can help protect against the impact of market fluctuations and economic downturns. Limiting the time horizon may also reduce risk, but it may also limit potential returns. Diversifying stocks is a good strategy within the equity portion of an allocation, but it does not address risk across different asset classes. Maximizing beta (a measure of a stock's volatility compared to the overall market) actually increases risk rather than reducing it.

You Can Reduce Your Investment Risk Most Effectively Through