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About investing

About investing

In order to successfully achieve your investment goals, particularly from a long-term perspective, it is important to avoid 'putting all your eggs in one basket'. When you spread your money across several different types of investment or 'asset classes' - known as diversification - you reduce the level of risk in your investment portfolio. It is also a more reliable strategy for achieving consistent returns over time. History has shown that there is no asset class that consistently outperforms all others.

Relying entirely on one asset class leaves you exposed if that asset class underperforms for a period of time. If, however, you have your investments spread over a range of asset classes, it's less likely that the performance of a single asset class will drag down your entire portfolio. When you spread your risk, you can offset negative returns in one asset class against positive returns in another class.

It is also sensible to diversify your money across different investment managers, as it is unlikely that one manager will consistently do better than all others and managers are rarely specialists in all asset classes. We recommend that you and your financial adviser regularly review the asset allocation within your portfolio. A properly constructed asset allocation will spread your investments across a mix of share, fixed interest, property and cash investments according to your risk tolerance and investment time horizon.

For further information regarding risk profiles, please contact your financial adviser.