Simple Definition:

Diversifying means the act of adding variety or different types of something [such as investments, products, or activities] to a collection or portfolio [a group of stocks (shares) owned by a particular person or company] in order to reduce risk and increase potential returns.

For example, if someone invests all their money in just one company’s stock (shares), they are taking on a high level of risk. However, if they diversify their investments by buying stocks from different companies across various industries, they reduce the risk because any potential losses from one company may be offset by gains from another.

Very Simple Definition:

Diversifying means investing in different things to make it safer and earn more.

For example, instead of investing only in a train company, you can invest in train, car, and airplane companies to diversify.