Don’t put all your eggs in one basket

Will your investment portfolio withstand any market conditions? Simon Bruce looks at the most effective way to prepare for all eventualities.

Basket of eggsOwners of 4×4 vehicles often appreciate them most when they leave smooth city roads for rough country lanes.

And in investment, highly-diversified portfolios can provide similar reassurance. In blue skies and open highways, streamlined city saloons might cruise along just as well as an all-road vehicle, but the real test occurs when the road and weather conditions deteriorate.

That’s why people who travel through different terrains often invest in a car that can accommodate a range of environments and conditions but without sacrificing too much in fuel economy, efficiency and performance.

Structuring an appropriate portfolio involves similar decisions. You need an allocation that can withstand a range of investment climates while being mindful of fees and taxes.