I’ve written in previous blog entries about how why it’s not wise to invest in something you don’t understand, why, when it comes to financial products, if it sounds too good to be true it probably is and why identifying the destination (your financial goals) are more important that identifying how your get there (a financial vehicle).

My third investment rules of thumb is:-

“Ensure you don’t put all your eggs in once basket” 

In July last year on this blog I told you a story about my Nan.  If you haven’t read it yet it’s worth reading before you continue.  You can find it here.

The reason I think that this story’s important is because, even though at the time I didn’t realise the significance….the principal of ‘eggs in baskets’ applies when you’re selecting where to invest your money.  Spreading your money across different assets tends to be a really good way of ensuring that you are not reliant on one different type of investment

So, should you do this?  Because of my nan? No  Because I’m suggesting it’s a good idea?  Definantly not.  However impartial and scientific research has suggested that spreading your assets is a wise move.

It also makes sense.  My Nan didn’t have an economics degree, or any form of formal financial education.  However she knew that you spread your savings, investments, or em, Eggs.

Thinking about it…my Nan was a bit of a finance expert.

She understood the importance of spreading your money, understood that by saving regularly and consistently you can build up a relatively significant amount of money and understood the importance of budgeting.

She came from a generation where people understood the benefit of saving longer term and had far more of a “save today and live tomorrow” culture.

So, with this in mind, let me share with you a (bonus) 4th tip….

I want you to think about this question:-

“What can we learn about managing our money from our mums, dads, nans and grandads?”

Sometimes we assume we live in a more sophisticated age and in certain respects we do.

However there are some universal financial truths which recently we seemed to have forgotten….

*  You get wealthier when you spend less than you earn and save what’s left over

*  If you save regularly over a long period of time you’ll build your wealth

and

*  By putting all your ‘eggs in one basket’ you could be taking unnecessary risk and may not receive the rewards you expect

Maybe it’s not all as complicated as we think….