Diversifying family assets

One of the timeless rules of asset management is diversification. Productive assets generally can be broken down into three large economic groups:

  • Land or property assets - land, rented apartments, shares in property investment trusts (SCPI)
  • Professional assets - shares in a limited company, shares in a PLC, open-ended investment fund (SICAV) shares
  • Interest bearing products - Building society savings passbooks, Home Savings Plan (PEL), bonds, monetary open-ended investment funds (SICAV), term deposits, life insurance

All productive investments are not subject to the same legal and tax rules and do not necessary grow at the same pace. Moreover, the investor does not expect the same return from each item.

All these assets react differently during a time of inflation or deflation. A good combination allows the hazards of circumstances to be offset. Assets diversification seems very much like a Golden Rule.





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