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Investment Notes

Superannuation is boring

By Alex Denham And so are brussels sprouts. Until you add butter and bacon and onion and herbs and fry it all …

Financial Literacy

We are hearing a lot about inadequate financial advice in the media over recent months, much of what is being said needs to be said. But how do we fix the problem of investors or clients not understanding the advice provided and, as a result, just going along with what has been recommended?

Remember it is your money

I recently wrote about ‘investing v speculating’, since then I have been asked why I quoted from a text written in 1949. Well I am reading anything I can lay my hands on to build easy ways to educate my clients; they want to understand the investment advice we give, they want to share the responsibility for the decisions made. So, I need to educate and keep educating.

A look at investing vs speculating

It is Sunday today and we have had howling gales in the Southern Highlands for the past week, gusting up to 110kph, so tree branches everywhere. So, this is a good time for me to do some catching up in the office, have a look at the past financial year to see how the domestic equity market has performed, and set some parameters for the construction of portfolios over the coming weeks.

The power of compounding

The article on the ‘power of compounding’ reminds me to repeat my warning from last year.

Many of us purposely save and set aside a sum of money for a particular event. It may be to assist with school fees for our grandchildren or just in case there will be high repair costs for our home in the years to come, when we are no longer earning. We purposely set this account aside, in the belief that interest is being earned and compounded over the years.

Understanding the risk of investing

Understanding the risk of investing – investors need to understand the risks attached to investing in capital growth assets. While we cannot insure against market risk, once the risks are clearly understood then limiting those risks will form part of the investor’s overall investment strategies.

Risk: it’s not about chance

As you begin to understand asset classes, the way markets respond to outside influences (such as economic conditions, cash rates, investor confidence) and how diversification of investments helps reduce risk, you can begin to take control of the construction of your own portfolios. Most importantly with this basic knowledge you can really understand what level of risk you wish to take.