Why you shouldn’t put all your eggs in one basket

Why you shouldn’t put all your eggs in one basket

Share this article on:

Coined in the early 1600s by the author of Don Quixote, Miguel de Cervantes, the saying ‘don’t put all your eggs in one basket’ has since become a valuable metaphor for explaining ways to manage your investment risk.


Be prepared to lose a few eggs
Many people are reluctant to invest because they’re worried about risk. “What if I lose everything”, is often the first thing a rookie investor asks. While all investing does come with risk, the fear of losing ‘everything’ is somewhat misplaced if you’re sensible about where you choose to put your ‘eggs’. Ignore the sage advice and put all of your money into one company stock – the investing equivalent of putting all your eggs into one basket – and you’ll be taking a huge amount of risk, more so if the company stock you pick is an un-proven business, like a new tech company, for example. If it fails, the bottom falls out of your basket, and you lose all your eggs. There are less risky alternatives of course, like bonds, but with less risk comes a lower chance of good returns.


Put your eggs in different baskets
One way to lower your risk without sacrificing the potential for higher returns is to spread your money more widely. Each additional investment type and financial market you select for your hard-earned money acts like a separate basket. This allows you to be cleverer about how you invest your money. Why choose one risk level, when you can pick several? Mixing higher risk investments, like shares with less risky things like bonds and mixing emerging markets with more established ones, like the UK gives you the chance of higher potential returns, while helping to limit your overall losses. It also puts some distance between your pots of money, so that no one local ‘event’, like an Asian market wobble, or Brexit is likely to impact you substantially. Experts refer to this as ‘diversification’ and broadly agree that it’s the best strategy for most investors.

So, forget having just one basket – you need a cupboard full of them. Buy a mix of things like shares and commodities for higher potential growth and bonds and property for some stability. And avoid being too biased towards one region or market – aim for the investing equivalent of an around the world trip, hitting as many global destinations as you can fit in. If you don’t feel confident making the decisions yourself, there’s always a digital wealth management service (think of us like the investing equivalent of a travel agent) who can take care of it all for you.


Have an egg-cellent Easter!


Please remember the value of your investments can go down as well as up, and you could get back less than invested.


Investing is for everyone.
Including you.

Wealthify is the new way to invest your money.

Try it now With investing your capital is at risk
Try investing with Wealthify
Share this article on:

Wealthify Customer Reviews

4.34 Average

339 Reviews

Jonah Cockshaw

I'm huge on personal finance, investing and saving. And, for me, Wealthify has allowed me to set up my investment fund, make use of my ISA allowance and make contributions / investments on auto-pilot. I knew that investing into Stocks, Shares, Bonds, Property and so on were all great, long term things to do, but Wealthify has made it easy and dummy-proof... I love it already!

Posted 1 week ago

Chris Littlefair

I have found it extremely easy to set up and monitor my ISA. There is plenty of information about stock movements being made on my behalf and it feels like a very personal service being offered by this young company.

Posted 1 week ago


Staff is very friendly and quick to respond to any questions that I had. Everything is extremely transparent with emails when they are making drastic changes in the investment plan and as for performance, they did really put my money to work hard with good investment choices and a truly diversified portfolio.

Posted 1 month ago


Lovely customer service, decent returns, easy account to open and close. Overall very satisfied!

Posted 1 month ago

Jim Corley

Wealthify customer service is absolutely superb, it really cannot be faulted. I have had several queries which were answered, and where needed, actions taken within a few minutes of my call to them. 10/10. With regard to investment performance, overall it has been slightly above the performance of my other investment pots, despite me making my original deposits when global markets were significantly higher than they are now. If they can stay on course, 16% in a year, given all the fiscal uncertainty, is superb.

Posted 1 month ago

Hugo Scheiff

Wealthify has been a solid investment platform for me in the last year. Global markets have been a bit shaky but they have managed to keep some fairly consistent returns and stability for my portfolio. Above everything else though is the customer service. It is truly excellent and always done with a friendly attitude and every question I have had has been resolved straight away. Worth sticking with them for the customer service alone!

Posted 1 month ago

Read more reviews at Reviews.co.uk