“ Risk comes from not knowing what you are doing “
Warren Buffet.
One of the finest things regarding my job is that I get to chat with a lot of folk about their investments, past, future and present whether for pension investing in Great Britain or using a QROPS for retiring overseas. And, sadly , I keep hearing about the same errors being made over and over again. After literally 100s of real-world interviews with real folks from all kinds of life I can say that these traders fall into 3 main areas.
The first 2 are DIY fans.
Before we have a look at the specific mistakes they appear cursed to replicate, let me bring up a question.
When did you last fit a new exhaust to your vehicle, install a central boiler system in your appartment replace the circuit board on your TV, or change a filling in your teeth?
Maybe you did one of those things latterly. Perhaps you actually are a dentist with a taste for automobiles and you probably did two. But I am guessing you probably did none. Alternatively you called a professional and paid them to do it and were pleased to do so.
That as confirmed, then why do so many people think that they can actively manage a complicated portfolio of shares and fund investments while also going to work or running a household?
Therefore why the Lone Wolf financier?
It might sound edgy and fun, but it’s customarily the most unfortunate. Out on their own, this newbie financier is very isolated and very exposed. Wolves hunt in packs and do not thrive alone. The same is true for investors. Without the shelter of the pack, the lone financier is stuck out in the frozen wasteland, scrapping around for food and the target of bigger, precarious predators.
It’s not an exciting existence, so why choose to go down this solitary route. Give yourself a chance of survival as an alternative.
Yes, a few of the people are spare time investors - they play with a tiny fixed amount of capital that they can stand losing, and this, while not specially smart, is at least not deadly. But sadly I meet many folks that are out on their own, trying to self manage a big portion, or even all, their assets. This is madness.
I also talk to many people who need to “do it solo” saying that they like to feel they have command over their assets.
Again, this seems a strange and crazy notion to me, for if your cash is invested in a portfolio of stocks you have little control over the global economy or catastrophes eg the latest BP oil slick.
The only control speculators have is choosing when and what to buy and when to get out.
And wherever you decide, on your own, to park your capital, there are heavy hazards.
These run from inflation to bank collapse. Even that presumably safe ‘bricks and mortar ‘ investment is risky, as the spectacular bursting of the home price bubble has illustrated.
Without expert guidance to help manage the risks concerned in investing, the lone wolf position is nearly mission impossible.
Disclaimer
Stockholders must always seek pro financial advice relating to the suitability of investing in any instruments or following any investing methodologies. Nothing in this piece shall be considered a solicitation or offer to buy or sell any security, future, option, fund or other finance instrument or to offer or provide any investment advice or service to any individual in any jurisdiction.
You’ll be able to find out more about investments, pensions, SIPP’s QROPS pension and obtain the right QROPS advice from R W Holmes who represents an independent firm of Financial Counsellors providing a high quality and impartial service on all facets wealth management and fiscal planning.
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This post was written by admin on February 28, 2012
