Your objectives.
Of course, we all have the same objective - 25% pa returns with nil volatility! However, in the real world, objectives boil down, quite simply, to income, growth or a combination of the two.

If you have maximum income and no potential for growth then you are locking into a gradual decline in your standards simply because inflation will erode the value of both your income and your capital.

       
       

The Time Scale.
The longer one leaves an investment the greater the potential for growth. Many people recall the stockmarket crash of 1987, but very few remember what happened for the whole of the year. In fact if you were invested in the UK market at the beginning of the year and still in by the end you would still have shown a profit.

Those who invested at the top of the market in 1987 and are still holding today would have seen some tremendous returns.

Volatilty within equities will always remain. The regulatory warning that share prices can fall as well as rise is not just a possibility. It is a certainty.

The next move is to consider "broad sectors".