Where Do I Keep My Eggs?
Diversification essentially echoes the age-old sentiment: don’t put all your eggs in one basket. When it comes to wealth management, it is important to have a diverse portfolio. That way if you drop an egg, or worse, the whole basket, you have a reserve available to you.
This may lead you to think that it is best to have multiple accounts, advisors, and various risk levels to pad out your portfolio. This is not necessarily the case and can lead to problems.
An example of this is the Tax Free Savings Account (TFSA). The Government of Canada has very strict rules around how much an individual can contribute to their TFSA. If you have multiple advisors and multiple accounts, an over contribution could lead to stiff financial penalties.
Your advisor saying to you, it’s best to keep your baskets with us, is not them trying to take all your business. In reality, it is their way of protecting you and your assets.
Keeping with the egg metaphor, your baskets should be kept on the family farm. Having one place where you can grow many crops, raise livestock, and serve as a home base is key. Simplicity works.
A balanced portfolio is just like a balanced breakfast: eggs, toast, and oranges– all on the same plate, not split across multiple tables and cooked in different kitchens.
Happy long-weekend everyone! Whether your eggs are chocolate or fried, I hope you enjoy them with family.
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