The best way to stay diversified

Asset allocation is a great way to structure your portfolio. Cris Sholto Heaton explains how to do it, and why rebalancing is important.

When you first set up a portfolio, you should decide how much you want to put in each asset. This is known as your target asset allocation. A simple example (not necessarily one we'd recommend) is to have 60% in stocks and 40% in bonds.

However, over time the make-up of your portfolio will drift away from this starting point, because certain assets will earn higher returns and so take up a bigger share of the portfolio.

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.