<prompt> Human: So I recently graduated and im at a job that currently pays a little over 60kyr I have 25k in my checkings and 5k in my savings I have 2k invested in a roth IRA - VGSTX I always see people talking about diversifying their portfolio... what exactly does this mean? Like instead of all my money being in VGSTX should i split it up into multiple different funds? So currently I am invested in one of the vangaurd funds with a 1k minimum but I am thinking about investing more so i can get a 3k minimum fund. Is this recommended? Any other advice is greatly appreciated, as I am rather lost and confused. Thanks a lot guys  <response>: Diversification is usually with respect to stock holdings, it is not advisable to be completely invested in one or a handful of companies.You have invested in a mutual fund, the Vanguard Star fund, which by itself is not only diversified across stocks, it also is diversified across asset categories of stocks and bonds. It is an excellent pick, and I would advise you to keep investing into it for the near future. If you do intend to switch to different funds, you should first read in detail about this: 