“There are two ways of learning: You can be taught how to do something correctly, or you can be shown the consequences of doing it wrong. In the world of investment, it’s a lot cheaper to learn from others’ mistakes…
… how can individual investors protect themselves?…”
- Understand the tradeoffs between risk and return – a higher rate of return usually indicates a greater risk of loss
- Diversify – ‘investing all your savings into a single property scheme or mortgage fund is not diversification. That is taking a massive, speculative bet on a single asset.’
- Fees matter -make sure you understand how much you are paying for your investments
- Work with “truly” independent advisers – ones who don’t receive any financial or other incentives from the products they recommend
Jim Parker writes a regular column “Outside the Flags” for Dimensional Fund Advisors in Australia – in this column, Jim writes about an investment scheme that was sold in Australian market; however, the lessons learned there can benefit investors everywhere – read more …Expensive_Mistakes
Expensive Mistakes