Don’t Put All Your Eggs in One Basket: Why Investment Diversification Matters

At Ginkgo Financial, we often meet people at a crossroads. You might have just sold a business, finalised a divorce, inherited money, or started thinking seriously about life after work. Whatever’s brought you here, the question is the same: What now?

One of the most powerful ways we can help is by making sure your investments work as hard as they can — without taking on more risk than necessary. And that’s where diversification comes in.

What is diversification, and why does it matter?

You’ve probably heard the phrase “don’t put all your eggs in one basket.” When it comes to investing, that’s not just good advice — it’s a cornerstone of smart financial planning.

The truth is, markets rise and fall. We can’t predict exactly when, or by how much. But by spreading your money across a range of investments — different types, industries, and regions — we can help smooth out the bumps and give your portfolio the best chance of long-term growth.

This approach doesn’t eliminate risk, but it does reduce your exposure to the ups and downs of any one area.

Case study: Ben and the business sale

Ben came to us last year after selling his design consultancy in Greenwich. He’d worked hard for decades and now had a sizeable lump sum to invest. But he was understandably nervous — he didn’t want to lose what he’d built.
He was also used to “control” — running a business where he called the shots. So the idea of putting money into something he couldn’t directly manage felt unfamiliar.

We worked closely with Ben to understand his comfort with risk, how much income he’d need over time, and the kind of legacy he hoped to leave. Then we built a diversified portfolio that spread his investment across different asset classes (like shares, bonds, and commercial property), sectors (from healthcare to technology), and geographical regions (including the UK, North America and Asia).

Now, instead of having all his wealth tied up in one business in one industry, Ben has a broad, balanced portfolio that works quietly behind the scenes — growing steadily, with fewer sleepless nights.

This is a composite example, based on real client situations. It’s for illustrative purposes only.

What does a diversified portfolio actually look like?

Here’s how we might spread someone’s investments:

• Asset classes: Equities (shares), bonds (government or corporate), property, cash, and alternatives
• Sectors: Healthcare, tech, utilities, consumer goods, energy and more
• Regions: UK, Europe, US, Asia-Pacific, Emerging Markets

The key is that we’re not just looking for a wide range of investments — we’re looking for ones that don’t all move in the same direction at the same time.

A quick word on correlation (we’ll keep it simple)

Imagine you own shares in two different companies: one sells sun cream, the other sells umbrellas. When it rains, one might go down while the other goes up. They’re negatively correlated — and that’s good for your portfolio.

If everything you own tends to rise and fall together (high correlation), diversification doesn’t help much. But if some of your investments zig while others zag, you get a more stable ride.

We use sophisticated tools to assess correlation between asset classes, helping us build portfolios that are genuinely diversified — not just scattered.

Case study: Priya, post-divorce and planning ahead

Priya, who lives in Blackheath, had recently finalised her divorce and received a lump sum as part of the settlement. She wanted to secure her own future — including helping her two children through university and thinking about retirement on her terms.

We took time to understand her new goals and priorities. She didn’t want to gamble, but she also knew that cash in the bank wasn’t going to grow fast enough to support her future plans.

We created a low-to-medium risk portfolio that combined steady-income assets like bonds with a smaller proportion in global equities for growth. Over time, we can adjust her mix as her life evolves — and we meet regularly to keep things on track.

This is a composite example, based on real client situations. It’s for illustrative purposes only.

So… how much risk is the right amount?

That depends on you — your goals, your timeframes, and how you feel when markets wobble. Some people want to maximise growth over decades. Others want to preserve what they’ve built. Many want a bit of both.

At Ginkgo, we don’t do off-the-shelf solutions. We’ll help you work out:

• What return you need to achieve your goals
• What level of risk you’re comfortable with
• How long you plan to invest for
• How your investments fit with your wider financial picture (including pensions, ISAs, property, and inheritance plans)

Then we’ll design a bespoke portfolio — or advise a suitable diversified investment solution  — that reflects all of this.

Let’s talk about what matters to you

If you’re thinking about investing — or reinvesting — and want to make sure your money is working hard in the right places, we’d love to help.
You can book a free initial, no-obligation chat with one of our advisers. We’ll listen first, then walk you through your options in plain English.
Because investing shouldn’t feel like guesswork — it should feel like a plan.
 

By Daren Wallbank

Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited 15/07/25
The value of investments can fall as well as rise. You may get back less than you invest.

Past performance is not a guide to future performance.