Managing financial risk involves understanding several key principles and strategies. Diversification is one approach that involves spreading investments across different assets to avoid overexposure to a single source of risk. On the other hand, consolidation refers to combining assets or accounts for simplicity or efficiency, which can sometimes reduce flexibility. Inflation is a broader economic factor that affects purchasing power over time and impacts how investment returns are measured in real terms. Meanwhile, liquidity refers to how quickly and easily an asset can be converted into cash without significantly affecting its value. Each of these concepts plays a role in how you manage your money, plan for the future, and adjust your financial strategy. Understanding the balance between them can help you make better choices—whether you’re saving for retirement, buying property, or investing in markets with different levels of risk.