Diversification is a risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind diversification is that a portfolio composed of different kinds of assets will perform differently than one consisting of only one or two asset types. This, in turn, reduces the overall risk of the portfolio. For example, if stocks are struggling, bonds may be doing well. Or, if the U.S. economy is in a recession, international stocks may hold up better than domestic stocks. By diversifying your portfolio, you can smooth out the ups and downs over time and improve your chances of achieving your long-term investment goals.