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Investment Strategy and Advice


How to Become a Successful Investor

How many people do you know that have made poor investment decisions? Plenty I’m sure. On the other hand, what about people that haven’t invested at all and as a result, are not achieving their financial goals? Again, I’m sure you all know someone. Make no mistake, investing successfully is not easy but for most of us it is necessary to secure our financial future. So, given the importance of investing, why do so many of us get it wrong and why do some of us avoid it altogether? Reasons often include;

  • Lack of time to carry out adequate research
  • Negative influences (usually from the media or someone who has had a bad experience)
  • Fear of receiving poor advice
  • Not knowing where to start
  • Putting all the eggs in one basket
  • Not understanding the risks that apply and their consequences
  • Being impatient and paying too much for the investment (or simply buying the wrong investment)
  • Not understanding the result you need from the investment so it meets your objectives
  • Not adhering to the recommended timeframe for the investment
  • Losing profits to the tax office because the investment was purchased under the wrong ownership structure
  • Not having a clear exit strategy
  • Not understanding the long term implications of not investing

To avoid these pitfalls and assist you to maximise your chances of making a profitable investment, we recommend you follow this three-step process:

1) Educate yourself

This is critical. Before you do anything you must invest some time in understanding the basics. This should include an overview of the asset classes (shares, property etc). You should look at the characteristics of each asset class including historical performance, the purchasing and selling processes and their associated costs, the current market conditions (and the forecast for short, medium and long term conditions), the volatility in returns (capital returns and income returns), the required investment timeframe to obtain the best results and the risks that apply now and in the future. Yes, this process will take some time but remember, once you have educated yourself, you’ll be far better positioned to judge whether the advice you receive in step 3) is in your best interests.

2) Determine your needs

Now that you’re educated, you need to work out what your needs are. For example, you might want to build up $500,000 of wealth over the next 10 years. Or you may be looking for an investment that will increase your monthly income by $1,000. Once you have determined your needs, you can then start to look at which asset classes might be suitable. You should now have a feel for which asset classes will provide the performance you need, a level of risk you are comfortable with, a positive outlook for your desired timeframe and acquisition and disposal costs you are comfortable with.

3) Seek advice from someone you can trust

You’ve now reached the stage where you need to obtain expert investment advice. With literally thousands of investment options available, an expert will take the time to understand your needs before making appropriate recommendations. In addition to the investment itself, an expert will determine which ownership structure will be most suitable (e.g. solely, jointly, company, trust, self managed super fund etc), advise the tax implications of the investment and develop strategies to manage these while you hold the investment (and when you sell), consider how the investment will impact other aspects of your situation (such as your estate planning position) and work with you on an ongoing basis to ensure the investment continues to meet your needs.

If you are looking for independent investment advice you can trust, contact Financial Planning Expert or phone (03) 5974 4350 for help with your investment decisions.

This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax advice prior to acting on this information.Opinions constitute our judgement at the time of issue and are subject to change. Financial Planning Expert Pty Ltd does not give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.
© Copyright 2011-2014 Financial Planning Expert Pty Ltd

ABN: 71 545 756 841 Australian Financial Services License: 402042

Phone: (03) 5974 4350

Email: info@financialplanningexpert.com.au

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  • About Financial Planning Expert

    Financial Planning Expert is an independent financial planning business based in Melbourne. We provide genuinely independent and conflict free financial advice. We’re experts in self-managed superannuation fund (SMSFs) advice and strategy, retirement planning, property and share investment advice, life and income protection insurance, tax planning, asset protection, estate planning and advice for Australian expatriates.