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 Crowdlending loans). Within these forms of investment, further diversification is possible (e.g. shares in various companies, accounts with various banks, various precious metals, various loan 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 investment is minimised.

The degree of diversification possible on LEND is very high. Investors can invest in small parts of several loans and in different loan categories, thereby maximising the distribution of their total investment.