Money: Don’t Put All of Your Eggs Into One Basket

"I see my role if needed as a financial mentor but one who can show warmth, practicality and empathy."
-Katherine Hann
September 19, 2017

Money: Don’t Put All of Your Eggs Into One Basket

By Katherine Hann

Money: Don't Put All of Your Eggs Into One Basket

With the low interest rates in our Australian economy, cash savings are less attractive to investors looking to earn higher returns. There are alternatives
out there, but the subject of ‘risk’ comes up.

People tend to invest in Australian Shares, Retail Property or Cash because it is what they understand. The danger in this is it’s a classic example of
putting all your eggs in one basket, or in the finance
world: ‘a lack of diversification.

With investing and asset classes, you can get much higher returns than your bank account can offer.
Just have a look at your superfund performance over the last year and compare that to your bank account and you’ll see what I mean. The Australian
stock market ASX200 performed at 8.3% over the last year, but if you look at the individual companies,
some returned as high as 43%, where some gave a loss of 38% last year!

So clearly the key is spreading your money around, and to make sure that you are personally comfortable with the level of risk you are taking.

This ‘nestegg’ article shows some of the other choices you have, and the key importance of putting your money in a variety of places.

According to Morningstar: In the last 10 years Property investing in Australia has performed at approximately 8%pa,
and Bonds at about 6%pa. Why is no one investing in International options?

Investments in International Shares, Emerging Markets, International Property, Infrastructure and Global Fixed Interest. They sound complicated but that’s what an adviser is for: to guide you through your investment options which are appropriate for your own personal situation.