As far as investment-friendly idioms go, ‘don’t put all your eggs in one basket’ has its uses. But its wisdom is limited. After all, how many extra baskets should the egg owner consider? How many eggs should be allocated to each? And how secure does each basket need to be?
This magazine’s principal focus is on those baskets that are most widely and easily traded: equities, funds, bonds, cash and property. They are also the most common ways investors can balance and spread risks. But taken together, these asset classes neither capture the entire investment universe out there, nor most individuals’ net wealth.
This is probably true of your own life, as it is for your average ultra-high-net-worth individual (UHNWI) – defined as someone with at least $50m (£40m) of assets to their name. According to a 2017 survey of UHNWIs by real estate consultancy Knight Frank, financial assets, real estate, personal property and business interests only account for 88 per cent of the average portfolio. The remainder may be harder to value, categorise and exchange, but is no less important than the traditional asset pile.