Which of the following best describes a diversified investment?

A diversified investment is best described as investing in a mix of asset types. This approach helps to spread risk across different investments, which can include stocks, bonds, real estate, and other asset classes. By having a variety of investments, an investor can reduce the impact of poor performance from any single investment or asset class on their overall portfolio.

When an investor puts money into a single company, trade, or asset type, they are exposed to a much higher risk. This concentration can lead to significant losses if that particular investment performs poorly. Similarly, investing only in government bonds or focusing solely on real estate limits the investor's exposure to the potential benefits of other asset classes that may perform better under different economic conditions. A diversified portfolio aims to balance risk and return, making it a key strategy in sound investing.