There are a lot of mum and dad investors out there who are completely overwhelmed by investment choices and different companies offering different products. Often they don’t have the confidence to manage their own investments and are looking for someone they can trust to manage their life savings for them.

There is nothing wrong with that and if you don’t have the confidence to manage your own investments then you probably shouldn’t.

One option in this case is a term deposit or a safety deposit bond. These are very safe and generally come with a guarantee. Remember thought that anything which is safe and particularly guaranteed will be very low return.

This is where people can leave themselves open to catastrophic failure because although they like the safety of these products, the income is too low so they will risk their portfolio by investing in higher return products without understanding what it is they are investing in.

This doesn’t mean you are stuck with low performance investments. The key is to learn what questions to ask of the fund manager when assessing a particular fund. This way you can make an informed decision and properly assess the risks.

Never ever invest in anything purely on recommendation of a friend or family member unless that person is an experienced professional in that type of investment.

Remember you are dealing with your life savings! Think about how long it took to accumulate it and what impact it will have on your life if you lost it. Given that it has taken your whole life to accumulate it, why wouldn’t you invest a fraction of that time to educate yourself on how to protect it?

A few basic and simple questions to ask when assessing your investment products will help you make an informed and confident decision:

- What are the exit fee’s if I wish to get out of the investment?
- How long has the fund been operating and show me proof of its performance?
- Is it just shares or a combination of shares, property and other business interests?
- Is the property commercial, industrial or both?
- Is the property in Australia or some overseas?
- Is the share portfolio on the Australian market or overseas market or both?
- Are the shares protected with a put option?
- Are the shares blue chip or speculative – show me proof?
- Do you write call options on the shares?
- Is the property portfolio tailored for capital gain or income?
- If the property portfolio is tailored for income, what is the occupancy rate?
- If the portfolio underwritten, if so who is the underwriter?
- Are there any margin loans on the shares and what percentage is financed?
- What fees are involved?
- How does the fund manager get paid? Is it commission or percentage or both?
- What reports will I receive and the frequency?
- Will I get to make decisions on my portfolio?
- How do I contact someone and who do I contact to discuss my portfolio?

If you ask some of these simple questions the fund manager will quickly assume you are not a mum and dad uneducated investor and his body language will change. If he takes a defensive position he either can’t answer because he doesn’t know or he has something to hide.

If the fund manager doesn’t know about the investment portfolio, how safe do you think your money is?

In my experience a professional in the industry will recognise an educated investor and will open up and freely give information. Professionals want to deal with educated people because they make confident informed decisions.

It doesn’t take much to learn the basic principles of investing but it is the only way to guarantee peace of mind.

Bye for now

Tim

Everybody’s heard of ‘mum and dad investors’, but what does it really mean?

This is a subject that I am extremely passionate about and if I had one goal in life it would be to help turn every mum and dad investor into an astute and well educated investor; so that they could guarantee the safety of their life savings and provide them the lifestyle I so strongly believe they deserve.

That is what the essence of this website is all about!

So if my words in this passage seem strong I apologise but it rips my heart out to think that a little education can save these people a lot of pain and yet it keeps happening.

It saddens me to know that these are the most vulnerable people in any investment market and the people who deserve to be ripped off the least.

To me a ‘mum and dad investor’ is the typical household parents (generally baby boomers) who have worked hard their whole lives, saved as much money for retirement as they possibly could while at the same time making sure their children have every possible opportunity by sacrificing their own. These people are the back bone of our society and a group I have enormous respect for!

Unfortunately their whole life right up to retirement is so focused on just getting to retirement that they never had the opportunity to properly educate themselves on what best maximises the return on their life savings in retirement while at the same time minimising the risks.

Too often to their own detriment they seek advice from ‘experts’ without knowing what questions to ask or they will settle for a low performance safety deposit bond not providing the income they had hoped for in retirement.

I couldn’t begin to imagine how gutted these people must feel when some worthless cockroach rips them off and leaves them with nothing or worse, a pile of debt.

The good news is that all investors, not just mum and dad investors can completely protect themselves from this type of event. This can only happen through proper education. I believe that I am obligated to pass on the information I have as a successful and well educated investor to the most vulnerable group of people to protect them in return for the free and abundant society loaded with opportunity that they have provided for me.

Purely through lack of education a lot of people planning for retirement don’t even realise that they have the opportunity to bring retirement forward in some cases to today just using the assets they currently own with virtually no risk.

I have made it my mission in life to change the fate of as many mum and dad investors as I possibly can and to show them how to educate themselves to recognise good from bad opportunities and how to protect their hard earned and well deserved retirement lifestyle.

Bye for now

Tim

In this blog I will talk about share trading with Options. I am not a stock broker or licensed financial advisor, I am not aware of your current financial situation and the information contained in this blog is not intended to be financial advice.

I am however, an astute and well educated investor and the intention of this information is to open your mind to the possibility of minimising or even eliminating the risks involved in share trading. I recommend that you speak to a stock broker who has a proven track record and is licensed to trade Options.

If your broker tells you that trading shares with options is risky then I would urge you to hang up the phone and find another broker.

If you’re a ‘mum and dad’ type investor who buys a parcel of shares on advice from a broker whom you trust with the intention of holding the shares long term for capital gain, then you might be interested to learn that it is possible to protect your investment in a similar way to which you would insure your car using a put option.

You can purchase from the market an Option to sell your shares at any time at an agreed price regardless of what’s happening in the market. This is called a ‘put option’.

You can set whatever price you like; however, the higher the price to more expensive the option. Insurance is no different.

Option contracts (on the Australian Market) can only be done on parcels of approximately 1,000 shares and the contract period is a minimum of one (1) month. With the right shares you can purchase an Option over 12 months or more.

This means that if the price of your shares drops below the agreed price you can choose to (but you’re not obligated to) sell your shares at that agreed price. Therefore, the only loss you will sustain is the difference between what you paid for the shares and what you sold them for plus what you paid for the Option and the brokerage.

H.I.H was considered a blue chip company before it went broke and thousands of investors lost a fortune because their investment was not protected.

Would you spend $250,000 on a house and not spend $2,500 to protect it with insurance? Of course not, so why do so many people invest their life savings in something and not protect it? The answer is, they didn’t invest the time educating themselves and took the advice of ‘experts’.

If your life savings are invested in a Managed Fund, ask the fund manager if your investment is protected with a Put Option. If not, why not? You looking for a straight answer, not the traditional “Trust me, we know what we are doing” response.

It’s worth noting that you can really only trade Options on high end blue chip shares in lots of 1,000. However, would you rather spend $50,000 on a properly protected investment or would you spend $10,000 on speculative shares with the potential to lose it all. If you going to do that – you’ll get better odds on the Melbourne Cup.

Bye for now

Tim

It’s a commonly held belief that investing your hard earned money in the share market or business or to a lesser extent property is risky. So is it really risky?

To answer that question you first need to have a clear understanding of what risk is. My definition of financial risk is to invest a set amount of money into something which has the potential to reduce that amount of money but not eliminate it. To invest in something with the potential to eliminate the investment is stupid not risky!

The belief that share trading or business ventures are risky generally comes from people who have either lost significant amounts of money (or know someone who has) because they chose that investment on the advice of someone but didn’t have their investment properly protected.

Protection of your investments is best done with a combination of two things. The first is insurance. Even shares can be insured to minimise the risk. I will explain that in detail in my next blog. The best protection will always be your own education. Don’t invest in anything you know very little about and are completely reliant on an ‘experts’ advice. Only a very small percentage of ‘experts’ actually know what they are doing. This is because the vast majority of their clients are uneducated.

Choose a stock broker or real estate professional (notice I didn’t say real estate agent) that only deals with education institutional investors.

Think about this for a moment…

If you took a loan 10 years ago for $25,000 and purchased a parcel of shares in Woolworths what would your investment be worth now?

On the other hand if you took a loan 10 years ago for $25,000 and purchased a Holden Commodore what would your investment be worth now?

The answer to this question seems so obvious and yet the vast majority of people will actually buy the car.

The fearful uneducated will say ‘well if I could see the future of course I would buy the shares but there’s no guarantee’. My answer to that is if you want a guarantee, you’d be better off buying a Plasma Screen TV, they come with a 5 year guarantee! But seriously, when they purchased the car 10 years ago they were guaranteed that after they paid the bank around $32,000 for a $25,000 vehicle in 10 years time it would be worth $5,000. Even with that guarantee they still went ahead and invested the money.

It’s important to remember that the key to becoming a successful investor is education! Learn how to protect your investment before you invest. A proper education will teach you that what you have been doing in the past is far riskier than any properly protected investment portfolio.

Bye for now

Tim