Diversification is an important strategy to manage investment risk and increase potential returns. To diversify your portfolio, consider investing in a mix of asset classes, such as stocks, bonds, real estate, and commodities. Additionally, within each asset class, consider investing in a variety of companies or funds with different market capitalizations, sectors, and geographies. By diversifying your portfolio in this way, you can reduce the impact of any one investment on your overall portfolio performance and increase the likelihood of achieving your long-term financial goals.