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And Don’t Forget Financial Education

18 Mar 2013 9:05 AM -
I’ve been in the financial and investment industry for 12 years.
In every one of those years, a group of investors somewhere in Australia has found themselves ripped off, scammed or exposed to some dodgy or dubious investment.
In some cases investors fell because of their own behaviour, unfortunately many others were betrayed by those who were supposed to be working in their interests.
A few weeks ago ABC's Four Corners program documented several of these instances.
To the dismay of most watching, the program reinforced the fact that the best form of protection is educating yourself because the regulators seem to only appear with a broom after the fact.
Over the past two weeks I’d documented the five areas all investors should focus on to ensure better outcomes  – planning, diversification, asset allocation, costs and discipline.
On reflection, there definitely needs to be a sixth – education.
For example, I was recently asked, “when is gold going up again?”
Like everyone else I have no idea, but at least I have an understanding of what has pushed gold higher this century – the person asking the question didn’t know.
They just knew gold had gone up and thought they’d better buy some before it went up further, and then became frustrated when it didn’t keep going up!
Unfortunately, it’s this impulsiveness and lack of understanding that leaves people susceptible to poor investment decisions or being scammed.
So briefly, here are some things to remember:
There’s no such thing as a risk free investment and there’s no such thing as a guaranteed return.
Beware celebrities selling any financial product – how reliable is an investment if it needs a celebrity to sell it?
Beware the latest financial fad and those advising on it – right now it’s self-managed super and there’s no shortage of various professions looking to cash in.
And the big question for self-managed super – what will be the future result of bad advice in an extremely complex area?
Watch Four Corners in a few years’ time and I’m sure we’ll see the answer to that one.

It’s never too early to invest in your future