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UP-TO-DATE: Goals and knowledge are vital when contemplating investment.
Photo: LAC Aaron Curran
THE key thing to
remember is that no
matter what state the
economy is in, there
are some basic principles for
investing that always apply.
You should never make
an investment without doing
The investment mar-
ket goes through cycles.
Understanding the nature of
these cycles can help you
manage the timing of your
investments and re-adjust
your portfolio as necessary
to minimise risk and take
advantage of opportunities.
Many investors think that,
if the share market is boom-
ing, it must be a good time to
buy shares and, if the market
is falling, they should stay
away or sell out. They could
be right -- buying shares on
the up is generally a good
idea, and so is minimising
However, depending on
the precise timing of the
trades, they may be making
market and sell out when the
market bottoms, you stand
to make significant losses. If
you stay away when prices
are at rock bottom, fearing
further falls, you could miss
out on potential gains when
the market rises. It's impos-
sible to identify the perfect
time to buy or sell shares.
A sound approach is to
remember your goals -- no
matter what state the market
Market movements can
affect even high quality
investments. But no matter
what stage the investment
cycle is at, your portfolio
should be diversified and
should reflect your tolerance
You may want to achieve
Are you thinking of taking up an
investment offer or are you deciding
what to do with some savings?
ASIC Chairman Tony D'Aloisio has
Before investing think about:
Some people have a simple
investment goal: get rich quick. Some
succeed, others get hooked into
schemes that promise the world but
can get them into deep water. Start by
identifying what you want to achieve.
Setting a timeframe for each of your
goals will help you stay motivated.
Where do you fit on the risk-taking
spectrum? Different investments carry
different levels of risk. To sleep easy at
night, be clear about the likely risks of
the investments you are looking at before
Some people like to be in control and
do things for themselves. They are con-
fident they have the knowledge to make
investment decisions. If that's your style,
you may want to develop your own port-
folio of investments. On the other hand,
you may prefer to invest through profes-
sionally managed investment funds.
Your investment goals will reflect your
values. But your values may also affect
what you decide to invest in. Many peo-
ple want to take a socially responsible
approach to investing, looking for indus-
tries that produce 'clean' energy or that
promote sustainable development.
some goals in the short term
and have other goals for
the medium and long term.
Think about how much you
can afford to invest and for
Start with an easy goal
such as taking a trip or pay-
ing off your credit card.
Then, once you've achieved
that goal, you'll feel more
confident about going after
your long-term goals.
Some investments can be
easily cashed in, like shares
in publicly-listed companies,
while others, like term depos-
its, don't allow you to readily
access your funds.
For more information on how to
invest, go to www.fido.gov.au or
call ASIC's infoline on 1300 300
Is it time to invest?
February 18, 2010
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