If your life was a portfolio, how would you invest?

MOST individual investors conform to the time-tested approach of establishing investment goals, structuring the portfolio, monitoring performance, and rebalancing accordingly. Portfolios are designed to meet future needs, while taking into consideration current requirements. Savvy investors know that a well-diversified portfolio is key to success. They also commit to a systematic approach that ensures their portfolios are aligned with their objectives.

With diversification as a central tenet, this portfolio-based approach can also be applied successfully to life and careers.

In 1960, global life expectancy at birth was 52 years. The typical life trajectory would have comprised an initial phase focused on education. This would have been followed by a linear career path (generally within 1 organisation), and thereafter, retirement. Each of these phases would have been highly concentrated. In other words, as if 100 per cent of the portfolio were in equities or bonds.