How To Protect Your Money

I am going to talk to you about how to protect your money, which basically means ensuring that you have eggs in different baskets. Diversification, which basically means spreading the risk will ensure that you achieve a wide spread of how your money is invested. What this effectively does is making sure that you don't have too much money in any one sector whether it is within any given aspect of the market or dealing in cash.

It's like balancing scales. You don't want it to be weighed to one side more against the other. The idea is to ensure they balance.

That's what we refer to as diversification, making sure you have eggs in different baskets. The asset allocation is really important. Not only for ensuring that you protect your money by investing in different fund houses in relevant component parts, but it's also the asset allocation that's driving the primary part of performance, not fund selection and not individual selection of stocks.

For example, if you have accrued 500,000pounds of savings, what you shouldn't do is to put all into account with one institution. The reason being if the institution should fail for whatever reason, you really committed yourself about putting eggs into one basket. The specification, spreading your money around, allows you to reduce the risk.

Remember, don't put your money into one basket. Spread the risks with different institutions and that's a way to protect your money. .