Diversification in investment is primarily aimed at:

Diversification in investment is primarily aimed at mitigating risks by spreading out investments across various asset classes, sectors, or geographical regions. The core principle of diversification is that by holding a variety of investments, the overall risk of a portfolio is reduced because the performance of different assets can vary significantly. When one investment may perform poorly, others may perform well, balancing the overall performance of the portfolio.

This approach helps to cushion against market volatility and potential losses. By not putting all your eggs in one basket, an investor can minimize the impact of any single asset's poor performance on their total investment. Therefore, the emphasis on risk management and stability in returns makes this strategy essential for a prudent investment plan.

In contrast, maximizing returns through concentrated investment ignores the benefits of risk spreading, and investing all funds in a single category could expose the investor to higher volatility and potential losses. Reducing the costs associated with investments typically pertains to expense management rather than risk mitigation through diversification. Thus, it is clear why the focus on risk reduction through a varied investment approach is the primary goal of diversification.