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Spreading Investment Risk

The saying ‘don’t put all your eggs in one basket’ may not be appropriate in every situation but it is certainly one to remember when looking to create a long-term investment strategy. Putting all your investments into one business sector, one country, or one group of countries adds a level of risk which for most people is not sustainable. Just take the dot-com bubble for example in which shares in technology companies soared, only to crash at the beginning of the 2000s.

Whilst it is possible to anticipate some potential investment risks, others are not so easy to foresee. For example, the recent EU elections which took Europe further to the right were largely predicted; although the extent of the results led to a fall in European stock prices. But President Macron’s decision on the back of those results to call a snap election in France was not, leading to ratings agency Moody’s commenting that there was a risk of France’s credit rating being lowered.

An investment portfolio which covers different sectors and countries can help to spread the risk; thereby potentially helping to smooth out any peaks and troughs within a long-term investment plan. If you are looking for advice on investments or if your situation has changed and you may therefore need to review your existing pensions or investments, contact Beckworth by using one of the links on our website.