Diversifying your investments is important for two reasons. First, if you invest all of your money in one type of asset, it's more likely that that asset will decrease in value. Second, if you invest all of your money in one company, that company may not be as profitable as other companies in the same industry. By diversifying your investments, you are less likely to have any one investment pay off more than the others and you are also more likely to make money over the longterm.