Investment Profile

After being in operation for about six weeks, I thought it would be appropriate to take a little time to thank you for all your comments and questions.  Although I will not be able to answer all questions raised it is hoped that the information that you gain from this blog will help you to make better investment decisions.  I must emphasise that the purpose for this blog is not to give financial advice but to encourage healthy discussion on a wide range of issue that perhaps you never thought of as investments.
One of the points to remember about investing is that advice that is given generally by any person is not applicable to all persons.  By this I mean that if a person recommends a particular investment, that investment may not be suitable for everybody   It has become a common practice in the market place for ‘experts’ to give investment advice and for all the people to rush out and act on the advice.  However I must caution you, that one of the fundamental rules of giving advice is that you must understand the investment profile of the person.
The investment profile of a person consists of three main factors.  First, how much risk is the person prepared to take?  This is dependent entirely upon the person as different people are comfortable with different amounts of risk.  This does not excuse the investment advisor as it is prudent to steer clients away from taking too much risk.  It can be true that sometimes people think they can live with the risk when they cannot.  One only needs to think about Cash Plus and Olint to prove the point.
Secondly, when investing, one must consider the time frame of the investment.  If one wishes to invest for three months only then the options for that person are very limited.  If they have a longer time frame in store then more options arise including possible tax free options.  The third factor is the age of the person.  Although not always true, a good general rule is that the older an investor is, the lower should be the level of risk.  This is because if a younger person loses money from a risky investment decision then they have time in which to recover.  Someone who is older or retired for example may not have that option.
I must stress that everyone is different and so what is good for one person may not be good for another.  Take some time to think about your own profile and write it down.  The next time that someone approaches you with an idea, see if it matches your investment profile.

Feedback Question: Do you think that understanding your profile will help you to make better decisions or is it unnecessary?