Thu Oct 27 11:07:54 CAT 2016

Stay abreast of changes in investment choices

By unknown | Jan 26, 2010 | COMMENTS [ 0 ]

WITH information overload one can't blame investors for not knowing what to do.

WITH information overload one can't blame investors for not knowing what to do.

A good example is that of already confused investors seeing an article in the press or watching a TV discussion that advises on a particular investment strategy.

Bear in mind that in many instances investment decisions are not based on fundamentals, but on how investors are feeling - negative or positive. If the information corresponds with their current feelings they might act on what they've heard.

The danger of this is that one is making an emotional decision, and that strategies might need to be changed from time to time, depending on the risk profile of the investor as well as their time horizon.

So if investors have acted on advice from the media, they might not read, hear or see when that advice changes.

In my experience this has often happened even in the past nine months. I refer to advice that I've given out on radio as well as had published.

In April last year I suggested to investors that they start phasing money back into the market over a six-month period. During this period and in the last few months the market has had a phenomenal rise. I'm now suggesting to investors that they tread warily about committing to any lump sum investment in the market, but again start a phasing-in process. If the market does fall then at least investors will average out.

I have also stated regularly that only those investors who have a long term strategy and an appetite for risk be invested in the market. On occasion I comment about the importance of having an understanding of the risks associated with an investment.

From time to time one needs to change one's strategy, and for those whom I'm in contact with regularly, I'm able to impart my feelings about the change in the economy which might be good or bad for markets, not that I nor any financial adviser is able to predict what will happen to markets in the short term.

While investors may take this advice now, things can change so rapidly that they may not pick up where advice given over the radio, TV or press suggests a change be considered in their investment strategy. An example of this is where one could be overweight or underweight in equities and the advice is to take some action.

Once again you may have acted on some advice that you read or heard about but will not hear future comments, and thus stay invested or remain disinvested in the market, unit trust or other fund.

So my advice to investors is to pay a fee to a registered financial adviser to stay informed.

With new regulations governing financial advisers, they are compelled to ensure that they give "best" and "appropriate" advice. They can no longer abdicate their responsibility and advise on an investment, earn a regular commission and then disappear into the sunset.


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