An “Investment Quilt” is a chart showing how different asset classes have performed over a calendar year.
If you google “investment quilt” you will find several iterations, this version is created with UK investors in mind and covers the last 15 years:
Click here for a pdf version: Quilt-chart-2022:
The quilt allows us to easily compare returns between asset classes. We can see clearly that each has good and bad years and that no pattern is obvious – returns are random.
This makes sense given that investment markets have millions of participants, making billions of decisions that moves trillions around each year.
As such, no-one can know for sure in advance what the current year’s best performing asset will be. They can guess, and they may be right, but that’s entirely different to knowing.
All of which leads TCFP up to conclude that maximum diversification is a very good approach to investing.
The TCFP model portfolio continues to be as sensibly diversified as possible. Our clients are part owners of some 8,500 companies in Asia, the emerging markets, Europe, Japan, North America and the UK, as well as many thousands of different Government’s bonds.
And that approach results in decent, inflation beating, returns that will provide 30+ years of after work income. Which is, in essence, the entire point of a financial plan.