Diversification is a key strategy in financial planning that involves spreading investments across different assets to reduce risk. By diversifying a portfolio, an investor can protect themselves against market volatility and potential losses that may occur in any one asset class. For example, instead of putting all of your money into one stock, you could spread your investments across multiple stocks, bonds, real estate, and other assets. This way, if one asset performs poorly, the overall impact on your portfolio is minimized. Diversification also allows investors to take advantage of different market trends and opportunities, as well as potentially increase returns over the long term. It is important to regularly review and adjust your portfolio to ensure that it stays diversified and aligned with your financial goals. Remember, don't put all your eggs in one basket - diversification is key to a successful financial plan.