"What should you look for in selecting an investment advisor?"
An honest investment advisor should tell you the following:
If ...
You own your own home, or have low-cost, fixed-rent or social accommodation;
You have health insurance;
You have enough money saved up to last a year off work;
You have no outstanding debts;
You have provided for your children's education;
... then you can start investing.
"What to invest in?"
A good investment advisor should tell you the following:
Property is good. In the UK and Ireland, demand is outstripping supply, rents won't cover mortgages, prices are escalating wildly.
Property management is time consuming.You need an edge to compete. Like having building or property management experience, or special insider knowledge.
Real estate appreciates in value, and can be rented or leased out.
Equities (Stocks and shares). Still in a post DotCom depression. Regular financial scandals aren't helping either. 'The Man In the Street' now doesn't trust the stock market, and that is fatal. Fat commission fees don't help either. It's a myth that equities always go up in value over time. Ask the Japanese, or the Italians.
Commodities. Doing well at the time of writing, because of war and political upheaval. The choice of the scared fund manager. Not suitable for long-term investment. If oil goes up and stays up, expect a depression in six months.
Hedge Funds. Flavour of the month. Too much borrowed money in these. Too much cross investing. A disaster waiting to happen. The only winners are likely to be their managers, and those who get out early.
Bonds. Depends on who's issuing them, the rate offered, and the likelihood of default.
A good investment advisor would say:
Invest in something that's currently turning a good net profit.
Invest in companies that were set up over ten years ago.
Don't gamble on what might give a good return in the future.
Don't invest in something you don't understand.
That's what killed the DotCom boom, and rightly so.
Companies hide liabilities. They use 'creative accounting'.
Gut feeling: if you have doubts about an investment advisor, they should be addressed.
This applies to any major decision in life; give doubts a fair hearing; they may be simple neurosis, or a higher, smarter part of you sounding a warning signal.
People will haggle over a £10 deal, but happily plonk down £5000 on a whim. Don't let your greed or psychological quirks override your reason.
If a deal offered seems too good to be true, it probably is. If a charming investment advisor gets you hyped up, take some time to cool down before getting out your chequebook.
Track record: speaks for itself!
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