You can’t predict the future. So how do you invest for it?

Russia and Ukraine had sort of drifted out of the headlines over the last few months.

But now they're back with a vengeance.

Now that winter is approaching, the Russians are pressing in again, perhaps keen to test Europe's appetite for further sanctions and retaliatory cuts to gas supplies as the cold weather arrives.

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The prospect of a resentful, angry nuclear power looking to pick a fight over European borders is not a cheery one, given how that sort of thing has turned out in the past.

But is it the sort of thing you should be taking into account when you invest?

Russia, Ukraine, politics, and investment

You'll read a lot of conflicting material on the Russia/Ukraine conflict. The majority of the Western press reckons Putin is entirely in the wrong.

And there's a significant minority of appeasement-minded people who seem to be arguing that because bits of Ukraine are practically Russian anyway, and because Russia's still smarting a bit from the break-up of the USSR, it's basically OK for Russia to just take what it wants.

That sounds to me like the classic rationalisation strategy someone might use to justify giving in to a terminally unreasonable passive-aggressive spouse or colleague.

But I'm no expert. And my own political views on this don't matter to your investments.

At the end of the day, this story isn't going to go away. Russia is in a difficult position. The oil price Russia's biggest earner is crashing. So is the rouble. Inflation is surging. So are interest rates.

But this is about pride. And sometimes people will put up with a lot of unnecessary grief in the name of pride. So anyone expecting a quick resolution of this situation is likely to be disappointed.

How asset allocation can help you deal with all this uncertainty

The tricky thing about geopolitics is that beyond being aware that it's there there's not a lot that you can do about it.

But you can say the same about almost any news event. None of us can predict the future. Things like Russia hovering menacingly over Ukraine are unpleasant and might make you feel as if you need to do something.

But if you spend your whole time positioning your portfolio in reaction to news events, you'll just end up frantically trading and largely wasting money on fears and hopes that never materialise.

The way to cope with uncertainty is through sensible asset allocation. Ed Bowsher spoke about it at the MoneyWeek workshop last weekend. Asset allocation sounds fancy. But really it just boils down to don't put all your eggs in one basket'.

At MoneyWeek, we think you can split your portfolio into just five simple parts: stocks, bonds, property, gold and cash. Those five asset classes perform sufficiently differently to one another to warrant their own categories.

So, loosely speaking, stocks and property will do well in inflationary times. Bonds will do well in deflationary times. Cash gives you flexibility and you can rely on its nominal value (if not its value after inflation) to stay the same or to grow a little. And gold does well when faith in the financial system and other assets is shaky it's insurance.

The exact proportion of your portfolio that you allocate to each asset boils down largely to your time horizon. By time horizon, we really mean how long you have to go until you plan to turn your savings into income.

But that's a process which has been made a lot more flexible by the current government's recent pension changes. Because annuities are now entirely optional, there is no deadline date at which you have to turn your entire savings pot into an income. And that means you can probably afford to take a little more risk than you might once have assumed.

As for exactly what you invest in under each asset type that boils down to valuations. For stocks, for example, you should be looking at cheap markets.

We like Japan which is still soaring as the Abe government throws the kitchen sink at deflation. We also suspect that Europe will end up learning from Japan's lesson, though it might take a while meanwhile, lots of European markets are cheap.

There's a range of other markets you might consider too. India is not the cheapest market, but there are good reasons to stay bullish on it. My colleague Matthew Partridge investigates in the latest issue of MoneyWeek magazine.