Diversification

Diversification refers to an expansion of choices. The opposite of diversification is monostructure. The aim of diversification is to increase opportunities and reduce risks.

For example, asset classes can be diversified in the context of financial investment: assets are divided among different forms of investment (e.g. shares, fixed-term deposits, precious metals and P2P loans). Within these forms of investment, diversification is also possible (e.g. shares in various companies, accounts with various banks, various precious metals, various credit projects).

The goal is always risk diversification. By simultaneously investing parts of the assets in alternative, differently risky forms of investment, the risk for the total assets is minimised.

On LEND, the possible degree of diversification is very high. Investors can invest in small parts of individual loans and thus distribute their total investment to the maximum.