Which of the following is a benefit of having a diversified investment portfolio?

Having a diversified investment portfolio is beneficial primarily because it helps to reduce overall risk. When an investor spreads their investments across different asset classes, such as stocks, bonds, and real estate, or across various sectors and geographies, they minimize the impact of poor performance from any single investment. This approach leverages the idea that different assets respond differently to the same economic events; while one investment may perform poorly, another may perform well, balancing out potential losses.

Diversification does not guarantee returns or offer complete loss protection—no investment is without risk. Moreover, higher risk concentration would actually increase the potential for significant losses, contrary to the benefits of diversification. In essence, a well-diversified portfolio can enhance an investor's ability to weather market volatility and achieve more consistent returns over time.