Updated: Dec 7, 2020
Our lack of knowledge makes us feel vulnerable.
If you don’t know much about investing, you have to put your trust in someone who claims they do. So there’s a powerful reason not to engage with the world of investing. Put simply, you may not know enough about it.
There’s a very simple way to overcome this, and it is to have a little knowledge on the subject.
I’M A BIT THICK ABOUT THESE THINGS!
Feeling a bit thick (words used by a client of mine recently) comes from a variety of sources. It’s one of the most powerful factors in decision-making or decision paralysis. It holds people back from doing things that could be of benefit to them.
To make an educated decision on how to invest your money comes down to a handful of questions you can ask:
How many parties are getting paid out of your fund? The bigger the number, the greater likelihood of an unreliable outcome long term.
Are the investments something you understand? Complex structures are opportunity to bury fees and commissions, and not in your interests, but somebody else’s.
Is it an open ended investment term, or does it have a definitive maturity date? If the world changes the week before your investment is due to mature (Covid-19 being an obvious event), your investment losses may be significant. Go for an open ended investment every day of the week.
I LOST A GOOD CHUNK OF CHANGE IN THE PAST
The most powerful of all is the first-hand experience.
Perhaps you dabbled in investments before and it didn’t go so well for you.
There could be many reasons for this: poor advice, no advice (you decided to do it yourself), you put all your available funds into one asset class, or even one stock, like AIB or Anglo.
Instead of chasing a return perhaps you could turn things on its head and focus on an approach to investment that is driven by the achievement of your goals, as opposed to the highest return.
THE HOLY TRINITY
Finally for today, creating a reliable investment strategy involves the following component parts being present at all times:
being clear about your investment time horizon;
knowing your appetite for risk / potential loss, and;
the actual return you require to meet your future goals and objectives
If you are struggling to answer any one of these questions, consult a professional adviser.
If you’d like to discuss any aspect of your investments, current or future, I offer a complimentary 30 minutes Zoom video conference call. Click here to schedule your appointment.