We have said it so many times, and even you would have read or listened to it on numerous occasions, that diversification is the key to the stock market. The reason is simple - it protects your portfolio from market risk. Our focus in this answer would be to give you what most people don't—the steps to diversify your stock portfolio. But before that, let us tell you that Jarvis Invest's created portfolio is well-diversified.

Here are the things you need to do:

Asset Allocation: This involves dividing your portfolio into different asset classes, such as stocks, bonds, cash equivalents, and real estate investment trusts (REITs). Each asset class tends to perform differently in various market conditions. For example, when stocks go down, bonds may go up, helping to offset losses.

Invest Across Sectors: Within the stock market, diversification involves spreading your holdings across different sectors of the economy, like technology, healthcare, consumer staples, and financials. This way, a downturn in one sector won't cripple your entire portfolio.

Company Selection: Even within a sector, choose companies of varying sizes and risk profiles. Large, established companies (large-cap) tend to be more stable, while smaller companies (small-cap) offer potentially higher growth but also carry more risk.

Geographic Diversification: Don't limit yourself to your home country's stock market. Consider investing in stocks from developed and emerging markets around the world. This can help mitigate the risk associated with a downturn in a specific region.

Before you go to the next answer, please understand that diversification doesn't guarantee complete protection from market downturns, but it can help reduce the overall risk of your portfolio. If you want a diversified equity portfolio, check out Jarvis Invest.