Q. As an investor over many years, I have always had a liking for oil shares. As a result of this I have done very well over the last 15 years, and have built up a large portfolio of shares in BP and Shell.
Needless to say, I have viewed the recent BP problems with considerable unease, and have thought of selling. But this would mean I would lose a lot of money based on the price just a few months ago, as the share value has halved.
What would you advise?
A. We should point out that we do not give advice on individual shares. In general however, this once again illustrates the importance of having a well diversified portfolio rather than a narrrow selection of shares.
We saw this sort of problem with Northern Rock in 2008, when investors had to make the call on whether to sit it out or sell. There really is no magic answer here, but it is vital to view your ‘oil wealth’ as part of your total assets.
In other words, looking at your overall position, assets versus expenditure over the next 20-30 years, how does it look? If you check this with your Financial Planner, and you decide that you will have enough, we would urge you to have your capital invested with the minimum amount of risk in a risk assessed diversified portfolio.
Of course, the portfolio’s aim will be to help you achieve your overall goals and objectives.
After all, why take more risks than you need to?
