13/07 - Category: Planning Ahead

Do you know the difference between education and experience? Education is when you read the fine print; experience is what you get when you don\'t. -Pete Seeger

Riding the wave of economic buoyancy during the Noughties saw many investors being seduced by financial products offering the potential for big returns. Leveraging, gearing and ‘capital guaranteed’ were all terms bandied about the BBQ, without it seems any real understanding or concern for the potential consequences. It has taken a market downturn of the size and scale we are currently experiencing to make us aware that all investments carry with them a level of risk.

It may seem like no one is immune. In the past few months, we’ve heard about several high profile cases in which investors have paid the price for failing to read and understand the fine print. In many cases, they just did not appreciate the risks inherent in the complex nature of many of the investments..

In the face of this, it can be sensible to focus on preservation and caution. Those who ask questions and seek out quality advice are more likely to become successful investors. It’s pretty simple really. If an investment seems too good to be true, it usually is. While there nothing dirty about risk, it’s important to have a clear understanding and feel comfortable with the level you are about to take on.

Some questions and tips to consider before parting with your money: