Don’t put all your eggs in one basket!
JULY 1ST, 2010 By DOMINIC
News of law firm Halliwells going into administration has sent shock waves through the Manchester business scene, though if you’re to read the various online postings speculation has been rife for some time.
It’s monolithic office in Spinningfields is a statement of indestructible corporate power completely at odds with its shaky foundations and it really serves as a reminder that not one organisation is immune to the economic tidal wave.
Whether you’re managing a business or your own finances, diversification is key or to put it quite simply – ‘don’t put all your eggs in one basket’. I’ve encountered several potential clients who have lost considerable chunks of their wealth by insisting they don’t diversify their share portfolio. Whether it’s been shares in RBS or Marks & Spencer sums as much as two million have been lost through loyalty to the brand and reluctance to change.
By creating a varied portfolio made up of cash, equities, gilts, property with a balance of high and low risk
you’re not totally reliant on one aspect ‘coming good’ – if one component falls the whole thing won’t collapse. The same principle applies to business.
Today’s Private Client Discussion Group presentation was popular for that very reason. Christopher Taylor from Blue Sky Asset Management gave an enlightened presentation on structured products. Investors and wealth managers alike are getting excited by some of the products out there as they give attractive returns but with an element of protection.
Just one last word to drive the message hard on diversification – who would have thought oil giant BP’s shares would have plummeted to a 14 year low to below £3 and that the international business would be in freefall? The Gulf of Mexico disaster wasn’t on anybody’s radar and the financial repercussions for millions is extremely unpalatable.
If you haven’t already done so, start thinking about the worse case scenario in terms of your investments it could be the most priceless thing you’ve done all day.
There’s a more detailed piece on structured products in the news section. Feel free to call us with any questions.
Posted in: Investment planning