It’s a good idea to have a good chunk of money in a savings account in case something unexpected happens. A base of six-months of living expenses is a smart “backup.” But any money beyond that is just sitting there getting dusty. To maximize your money, you can invest some. Investing means buying something that you think you can sell for a higher price later on. People invest in all kinds of things, including stocks and bonds. If you buy a company’s stock and the price goes up, you’ll make money. But if you buy stock and the price goes down, you’ll lose money. Some investments are riskier than others. For example, investing in an established company is safer than investing in a new one. But risky investments, like buying stock in a new company when the shares are cheap, often offer the highest upside when things go well. Safer investments have less potential loss and less potential gain. So what should you do? Diversify your investments so you have some money in risky investments and some money in safe investments. It’s better to have a few small investments than one big one.

Diversifying your investments means...

A) investing in one fund managed by a group of people.

B) making sure you have six-months of living expenses in your savings account.

C) buying stocks when they are cheap and selling them when their value increases.

D) having both safe and risky investments.