The cliche states "dont put all your eggs in one basket".  In investments, this is a critical approach to take, as put simply, you cant predict the future.  Interest rates and inflation change.  Just because one investment area performed well or poorly last year, that is no guide to relative performance next year.  By investing in a range of assets and companies, we avoid the risk of being fully exposed to one area.

By ensuring that your risk profile is understood by your adviser, a recommendation can be put forward to match the portfolio with the level of risk that is suitable for you.

The portfolio is then spread between various asset classes to provide the needed diversification.  This then needs regular review to ensure that the allocation remains suitable.

One way of diversifying is to use Funds.  A multi asset fund can mix various assets in one Fund.  Or, a number of funds can be used to provide the asset mix.  You can also invest directly although diversification may be harder to achieve with this approach.

Diversification doesn't guarantee returns, but it does provide a sensible way to help manage risk and return.

Past performance is no guide to the future, and advice is recommended.