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Reducing investment risks

Written by Dale Gillham

Monday, 22 October 2007

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Reducing investment risks
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The question you have to ask is this; would you give your money to someone who may not be any more educated at investing than you? While there are a number of good advisors who recognise that financial advice is more than just recommending product, on the whole they are governed by an approved product list, which means there is a lack of flexibility and impartiality when it comes to supporting you and your investments. Given this, if you do decide to invest your hard earned money with an advisor, make sure they have a track record of delivering solid returns over a period of least four to five years.

The amount an investor has to invest tends to change their perception of the risk they are taking, and the research required to manage that risk. Usually this is because it is much easier to swallow a $1,000 mistake than a $500,000 mistake. But the process taken to invest $500,000 or $1,000 should be exactly the same, as they both represent the same amount of risk. Given this, irrespective of the amount of money you have to invest, you should always take the same amount of time researching your options to ensure you are protecting your capital on each and every occasion.

Remember, the process taken to select and manage a portfolio of shares is the same regardless of the size of the investment. Given this, education is extremely important for any type of investor, however, I would say it is even more important for the smaller investor as they cannot afford to lose. Remember, big investors were once small investors, so the earlier you educate yourself the better.

*Dale Gillham is chief analyst at Wealth Within, and developed the first government accredited Diploma of Share Trading & Investment course.

*The opinions expressed in this article are those of the author, and don’t necessarily reflect the opinions of DYNAMICBUSINESS.com or the publishers.

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