Beware

Beware the Distractions

The multi-trillion-dollar global financial services industry creates distractions that prevent investors from receiving the returns they are entitled to. In today’s modern world, the ‘market noise’ is deafening. The loud halers begin in the media when you wake up and are reinforced in print and on the web. The din then continues with pitch after pitch from thousands of brokers, funds managers and investment banks throughout the day. Everyone wants your money, enticing you with promises that they will deliver above average returns due to their better forecasting skills and superior past performances. The ‘noise’ aims to whip up your greed and fear emotions so you will chase returns. It asks you to do the impossible: time the market. It wants you to buy hot stocks, buy hot managers, and believe countless financial gurus who say they can predict the future. And time constraints and lack of knowledge mean that many people do believe and are led astray - only to have their hopes crushed in the inevitable losses at the end of each fairy tale.

The consequence is that most investors do much worse than the standard market indices.

Chasing past performance and believing in short-term market timing, have proved to destroy most investors’ ability to enjoy the returns they are entitled to. The most recent study completed by Dalbar, a Boston-based research firm, concluded that, even though the US S&P500 Index returned an average of 11.8% pa over a 20-year period to the end of December 2007, the average investor received only 4.3% pa over the same timeframe. This represents a massive 7.5% pa underperformance.

What remains clear and concerning is the fact that most investors around the world continue to persevere with investment strategies that simply do not work over time.

Their portfolios often lack adequate diversification, structure and take on far more risk than is necessary.

They predominantly invest near the end of every boom, and are there for the brunt of every bust.

At Your Fair Share, we believe there is a better way.

Beware the Traps

The Australian Securities & Investment Commission (ASIC) provide a well resourced website providing investor warnings and financial tips against scams.

Click here for ASIC’s scams & warnings link

 

Beware the Pitfalls

The Australian Taxation Office (ATO) provide a well resourced website providing investors with warnings and financial tips via their taxpayer alerts and warnings against aggressive tax planning.

Click here for ATO link