​UnitedHealth's collapse: why spreading your money matters​

​​​What happened to UnitedHealth?

​UnitedHealth, once seen as one of America's strongest healthcare companies, has seen its share price crash by 50%. This sudden collapse has shocked investors who thought their money was in a safe place.

​Several problems hit the company at once. The US government began investigating claims that UnitedHealth was overcharging for its Medicare services. This was a major blow as this part of the business had been very profitable.

​At the same time, UnitedHealth faced rising costs as more people started having medical procedures that were delayed during the pandemic. This meant the company had to pay out more in claims than it expected.

​The final straw came when UnitedHealth announced its earnings were much lower than expected. The company also warned that things wouldn't improve quickly. This bad news sent the share price tumbling even further.

The appeal and danger of betting on one company

​It's easy to see why people put all their money in one company. If you had invested everything in UnitedHealth ten years ago, you would have made enormous profits – until recently. The temptation to chase these big returns is strong.

​We've all heard stories about people who got rich by backing the right company. "If only I'd put all my money in Amazon years ago," is a common thought. When these bets work, the rewards can be life-changing.

​But UnitedHealth shows what happens when things go wrong. Investors who had most of their savings in this one company have now lost half their money in just a few months. That's devastating, especially for those nearing retirement.

​This is why spread betting and other trading products should be part of a wider strategy. Chasing bigger returns by putting too much money in one place can lead to big losses that take years to recover from.

Even the biggest companies can crash

​UnitedHealth was worth about £400 billion at its peak – making it one of the biggest companies in the world. Many investors thought a company this large was too big to fail, but they were wrong.

​This proves an important point: no company is completely safe, no matter how big or successful it seems. Every business faces risks that can damage its value. Past success doesn't guarantee anything about the future.

​When thinking about how to buy shares, remember that even the most solid-looking companies can run into trouble. Betting your financial future on one or two companies is extremely risky.

​UnitedHealth was seen as a "quality" company with steady growth and strong finances. Yet it still crashed. This pattern repeats throughout market history – from banks in 2008 to tech stocks in 2000 – reminding us that no single company deserves too much of your money.

The problem with sector concentration

​Another lesson from UnitedHealth is not to put too much money in one sector. Healthcare stocks are often seen as safe investments because people always need medical care, regardless of economic conditions.

​However, this crisis shows that entire sectors can face problems at once. When regulatory changes or industry challenges emerge, they often affect all companies in that sector. If you had multiple healthcare stocks, you'd likely be facing losses across all of them right now.

​This happens in every sector. Energy companies all suffer when oil prices drop. Banks all struggle during financial crises. Tech companies often face similar regulatory challenges. True protection comes from spreading money across different types of businesses.

​If you're looking for an easier way to spread your money across sectors, ETF trading could be the answer. ETFs let you buy a basket of different companies in one go, which instantly reduces your risk compared to picking single stocks.

Finding the right balance between growth and safety

​The UnitedHealth story highlights the central challenge of investing: how to balance growth with safety. Concentrated investments might grow faster in good times but offer little protection when things go wrong. 

​This doesn't mean you should avoid individual stocks completely. Instead, think about using a balanced approach. You might put most of your money in diversified funds while using a smaller portion for individual companies you believe in. 

​Many experts recommend a simple rule: don't put more than 5% of your money in any single company. This means even a complete collapse would only cost you 5% of your investments – painful but not devastating to your financial health. 

​Finding your personal balance depends on your age, goals and comfort with risk. Younger people might accept more concentration for growth potential, while those near retirement typically need more safety. Using a demo account lets you practice different approaches without risking real money.

Why you need to check your investments regularly

​The UnitedHealth situation also shows why regularly reviewing your investments matters. Many people who had too much money in UnitedHealth probably didn't start that way – the position likely grew over time as the stock performed well.

​For example, if you invested equal amounts in five companies and one tripled while the others stayed flat, that one company would now represent over half your portfolio. Without regular adjustments, successful investments naturally become a bigger part of your portfolio.

​Checking and rebalancing your investments means sometimes selling part of your winners and buying more of your underperforming investments. This feels counterintuitive but helps manage risk and can actually improve returns over time.

​For those who find this emotionally difficult, consider using investment platforms that handle rebalancing automatically. This removes the psychological challenge of selling things that are doing well while ensuring your money stays properly spread out. 

Different types of investments for better protection

​Beyond spreading money across different companies and sectors, consider different types of investments entirely. This gives you the best protection because different investment types often move in opposite directions during various economic conditions.

​While shares offer growth potential, other investments like bonds, property funds, and gold often perform differently during market stress. For example, when shares crashed in March 2020, government bonds generally held their value or even gained.

​Including some international investments also helps protect against UK-specific economic problems. Global markets don't always move in the same direction as the UK market, creating another layer of protection. Trading signals can help identify opportunities in foreign markets.

​The goal isn't to pick next year's best performers but to build a mix where everything doesn't fall at once. This reduces the ups and downs of your overall investment value and helps you avoid devastating losses.

How to spread your investments properly

​Creating a properly diversified portfolio is simpler than many people think. Start by looking at what you own now and identify if you have too much money in one company or sector.

​Next, decide what percentage of your money should go in different investment types based on your age, goals and comfort with market swings. As a rough guide, many advisers suggest subtracting your age from 100 to get the percentage you might consider for shares.

​Consider using index funds or ETFs for most of your portfolio. These automatically spread your money across hundreds of companies in one purchase, giving instant diversification at low cost. Trading apps make it easy to access these investments.

​Finally, set a regular schedule – perhaps every six months – to check and rebalance your investments. This keeps your risk level consistent and stops successful investments from becoming too large a portion of your portfolio.

How to protect your money against stock market crashes

1. ​Do your research on how to spread investments across different companies, sectors and investment types
2. ​Choose whether you want to trade or invest for the long term
3. ​Open an account with us (https://www.ig.com/uk/application-form)
4. ​Search for a mix of different investments that match your risk tolerance
5. ​Review your investments regularly to maintain proper balance

​UnitedHealth's dramatic fall shows that even the most respected companies can lose half their value in a short time. While betting everything on one stock could have made you rich, it's equally likely to cause devastating losses. By spreading your money across different investments, you won't hit the jackpot, but you will protect yourself from financial disaster when individual companies crash.