Financial literacy is not given importance in the school nor at college level, and this has led to confusion on how to manage money responsibly. The world of finance is full of jargons that is often difficult and confusing. It is important that we know how the world of money works. Here are some financial terms that will help you understand better. The importance of diversification A very important concept is to make your money work for you. It is extremely important that all your savings aren’t put in a single place, it is imperative that you pick a few options that will bring you return investments. The key here is to reduce risk so that you do not end up losing your money, so it is important to use various channels that are not only safe but also bring high returns. By diversification, you could invest your money in property or stocks, mutual funds or even bonds. Hence, choose wisely and invest in the right place for maximum growth. What are stocks and mutual funds? A stock can be described as an ownership certificate of any company. When you purchase a stock of a company, you are eligible for a portion of a company’s earnings.