TALKING FINANCE with Justin Baiocchi of Baiocchi Griffin Private Wealth Always look under the cover My work often requires spending extended periods in Sydney, catching up with clients. Over the years I have fallen into the habit of buying my children a small present every time I'm in Sydney. It's not exactly a second Christmas, as I prefer the presents to be more learning oriented than say, a foot-long slab of chocolate, so they usually end up getting a book, or a boardgame or card game. On my most recent trip I had bought our youngest, Hugh, a book about a society of magical flying unicorns. That night, during a Zoom video chat with my wife, Liz, she showed me some books she had bought the kids that day at the school book fair, and of course, one of them was the book about the magical flying unicorns! Bizarrely, we had both bought the exact same book on the exact same day for Hugh. Jack, our eldest, then popped up in the background of the video call, holding up another copy of the book about magical flying unicorns - it turned out he had a brand-new copy of the book sitting unread on his book shelf. So we now owned three copies of the exact same book. I've always said to my kids that they can have as many books as they wanted and I would never say no to buying them another book, but having three copies of the same book in the house was a little ridiculous. The situation led me to thinking about similar investment mistakes (it's a pretty tenuous link, but stay with me, there's definitely one here). The most obvious one is diversification, or more appropriately, the lack of diversification. I remember a client, many years ago, telling me that you couldn't go far wrong by just investing in shares in the big four banks. The problem with that strategy, to stick with the book analogy, is that while the cover of each bank may look different, inside of each they are all very similar. That is, whatever is impacting one bank is probably also impacting the others (outside of company specific self-inflicted blunders and goodness knows there's been quite a few of those at the banks over the years). If one bank is in trouble, due to say, a deteriorating housing market, then it's a pretty safe bet that the others are in trouble too. Properly implemented, diversification means holding investments which cover a diverse range of industries, sectors, asset classes and even countries. It's the epitome of the old saying, 'never put all your eggs into one basket. Like that other old saying 'check with your wife before buying presents for your kids (or just go for the foot-long slab of chocolate): BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1, 462-464 Peel St, Tamworth NSW 2340 6766 9000 AW7403938 AFSL No 424658 This article is general in nature and does not take your individual situation into account. You are advised not to act on anything contained herein, or discussed as a consequence of the contents of this document, without receiving financial advice from a suitably qualified person such as a financial planner, lawyer or accountant. Follow us on Twitter @BaiocchiGriffin Find us on Facebook facebook.com/BaiocchiGriffinPrivate Wealth www.bgprivatewealth.com.au TALKING FINANCE with Justin Baiocchi of Baiocchi Griffin Private Wealth Always look under the cover My work often requires spending extended periods in Sydney , catching up with clients . Over the years I have fallen into the habit of buying my children a small present every time I'm in Sydney . It's not exactly a second Christmas , as I prefer the presents to be more learning oriented than say , a foot - long slab of chocolate , so they usually end up getting a book , or a boardgame or card game . On my most recent trip I had bought our youngest , Hugh , a book about a society of magical flying unicorns . That night , during a Zoom video chat with my wife , Liz , she showed me some books she had bought the kids that day at the school book fair , and of course , one of them was the book about the magical flying unicorns ! Bizarrely , we had both bought the exact same book on the exact same day for Hugh . Jack , our eldest , then popped up in the background of the video call , holding up another copy of the book about magical flying unicorns - it turned out he had a brand - new copy of the book sitting unread on his book shelf . So we now owned three copies of the exact same book . I've always said to my kids that they can have as many books as they wanted and I would never say no to buying them another book , but having three copies of the same book in the house was a little ridiculous . The situation led me to thinking about similar investment mistakes ( it's a pretty tenuous link , but stay with me , there's definitely one here ) . The most obvious one is diversification , or more appropriately , the lack of diversification . I remember a client , many years ago , telling me that you couldn't go far wrong by just investing in shares in the big four banks . The problem with that strategy , to stick with the book analogy , is that while the cover of each bank may look different , inside of each they are all very similar . That is , whatever is impacting one bank is probably also impacting the others ( outside of company specific self - inflicted blunders and goodness knows there's been quite a few of those at the banks over the years ) . If one bank is in trouble , due to say , a deteriorating housing market , then it's a pretty safe bet that the others are in trouble too . Properly implemented , diversification means holding investments which cover a diverse range of industries , sectors , asset classes and even countries . It's the epitome of the old saying , ' never put all your eggs into one basket . Like that other old saying ' check with your wife before buying presents for your kids ( or just go for the foot - long slab of chocolate ) : BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1 , 462-464 Peel St , Tamworth NSW 2340 6766 9000 AW7403938 AFSL No 424658 This article is general in nature and does not take your individual situation into account . You are advised not to act on anything contained herein , or discussed as a consequence of the contents of this document , without receiving financial advice from a suitably qualified person such as a financial planner , lawyer or accountant . Follow us on Twitter @BaiocchiGriffin Find us on Facebook facebook.com/BaiocchiGriffinPrivate Wealth www.bgprivatewealth.com.au