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Concentration Risk
The chance of a large loss because too much depends on one company, place, industry, or event.
Example
Riya puts all $100 into one game studio. Its new game fails, so nearly her whole amount falls at once. Splitting the $100 would reduce that one-company damage.
How it fits in
Concentration can hide inside several funds if they own the same large companies or respond to the same economic force. Check the underlying holdings and their weights, not only the number of product names. Diversification can reduce this risk, but it cannot remove market-wide losses or make the remaining mix suitable for every goal.
Where this is taught
Related terms
When the money you earn from saving starts earning its own money on top.
Interest paid only on the original amount, never on the interest you have already earned.
Needs are the things that keep you safe and well. Wants make life nicer. Mixing them up is what empties most budgets.