At first glance, it is not easy to connect the eggs and rabbits of the Easter holidays month of April and traditions surrounding creatures like hens and rabbits to personal savings. Dig a little deeper, however, and there are many lessons to be learned, says John Manyike, Head of Financial Education at Old Mutual. The first is make sure we don’t put all our eggs into one basket.

For example, holding on to cash at home is expensive. This is because cash that is not banked does not earn interest. Secondly, if money is to work for you, it cannot be left in one place; it must be spread across several investment products or services.

“Spreading or diversifying your investments and savings means taking advantage of different offerings and the benefits that each type of investment offers. Most importantly, it is a way of reducing the financial risk on your hard-earned money. If a negative event occurs in one area, say stocks, and your returns from these suffer, your other investments will continue contributing to building security and wealth.”

When moving personal ‘financial eggs’ from one basket to several, it is best to match your diversified investments to your individual life goals. Consideration should be given to the different life cycle stages you will experience. Getting this right should involve an investment adviser who can help to build a portfolio of short, medium, and long-term investments and savings that will meet your needs as your circumstances change.

“A diversified portfolio should include provisions for family emergencies and meeting family needs for medium-term requirements. The long-term strategy should help build wealth and safeguard the family,” says Manyike, adding that effective financial planning could see diversified investments including:

• Savings accounts (including tax-free accounts) for short-term needs 
• Fixed deposits over various terms and offering higher interest rates for medium-term savings 
• Money market investment which generally requires larger investments  
• Unit Trusts that allow groups of people to invest together in leading listed companies 
• Shares (equities) in listed companies 
• Bonds, which involve money being lent to companies or the government which then pay back the capital and an agreed amount of interest at an agreed time 
• Offshore investments to take advantage of the world’s strongest economies and companies  
• Life insurance that can also include provisions for disabilities so that money still flows to the family 
• Educational insurance to fund future studies at a tertiary institution 
• Retirement annuities for a well-deserved retirement

“Savings and investment options are almost unlimited.Some might attract younger investors who are prepared to take some risk to increase returns and are ready to take on investments with a volatile history. Older people, however, intent on securing a good retirement, would want less risky investments that offer steady returns, even if these are lower than other investments,” says Manyike.

By diversifying and making sure that all your eggs are in different baskets, you must accept that returns on investments can rise or fall in response to market events. Because these changes can occur, being a good investor requires patience and allowing time to take its course.

“If an investment suddenly doesn’t show the growth you expect, it is easy to panic and switch to another product. Sudden changes can attract penalty fees, and there is no certainty that new investments will perform better. It is better to be patient and allow the investment time to show what it can do.”

“It is at this point that good advisers who closely follows markets earn their fees. They will be able to advise you to either swap investments or hold on for better times,” says Manyike.

“The younger you are when you start to save and build a varied portfolio, the better your prospects for building wealth are—holding back in the hopes that things will get better means getting into markets later, and a reduced ‘payday’ in later life.” To get a better sense of your financial goals we would also advise for you to seek a professional financial advisor to help plan for your positive financial future.