Gambling Vs Investing in the Stock Market

By Jason Fittler

Education is the key to success in any endeavor, investing is no different.

After the Global Financial Crisis many people would now consider the stock market a high risk activity and as such liken it to gambling.  This fear is linked to your knowledge and understanding of the stock market. The truth is that most people do not understand the basics. When it comes to investing in the stock market they rely on information obtained through the media, friends, family or their own limited experience.

The majority of investors in the stock market have an experience like this, you get a hot tip from a friend on a stock, you invest a couple of grand looking  for a gold lotto outcome, the stock goes bust you do your money and from this one experience you determine that the stock market is high risk. The fact is what you just did was gamble; you made an uneducated ill informed decision and lost money. Much the same as betting on a horse this is not investing.

The stock market is indeed a complex place, for us professional investors it has taken many years and countless hours of study to start to understand the stock market. The following holds true for investing;

1. You must have professional advice, the stock market is complicated and you will need help to be long term successful.
2. Everyone who has a super fund is invested in the stock market as such everyone should seek to educate themselves more about the market.
3. There are three types of investments, cash, shares and property. You should have a little invested in each.
4. You do not invest in the stock market you invest in companies such as BHP, Woolworths, Qantas, NAB and Telstra. These are real businesses which you use in your everyday life. Next time you pay your phone bill, stop and think that your money is going to a Telstra shareholder. As such it is important to pick the right company.
5. You will have losses, accept this and move on. The same holds true for property, anyone who tells you different is trying to sell you property.
6. You do not hold individual stocks forever; you can buy and sell a stock more than once. It is important to take profits and turn the money over, out of stock which have reached their potential and into those which are still growing.
7. Sustainable high dividends are a must; if the income of a stock is high then the price will move up over time.
8. Focus on reasonable returns, an average return of 10%pa is outstanding over the long term.
9. Avoid hot tips, 99% will go nowhere. This is gambling.
10. Take a long term view; this is harder than it sounds. Those who did this during the GFC are well in front. Those who panicked and went to cash are either hoping for a dip back or complaining that the stock market is high risk.

Gambling is a high risk activity done for fun, investing in the stock market is a long term strategy to provide you with an income stream to allow you to improve your lifestyle.  

When you need professional advice call us, (07) 4771 4577.

Focus on What is Truly Important

By Jason Fittler

Would you believe that on average people spend more time planning their holidays than attending to their finances. I find this hard to believe! Then again I am a financial adviser.

Often we do not achieve the results we want in life, our life is not how we thought it would be, all too often we start out with a plan on how life should be, but never achieve the goals. All too often somewhere along the way we get distracted, in this world there are plenty of issues which can distract you from achieving your goals.

Distractions can be good and bad, bad distractions are generally bad for your health, marriage and finances. Distractions come in many forms, work, relationships, friends, money, gossip, goods and services.

We live in a world where technology dictates our habits, we are connected all of the time and never get a chance to slow down.

To take control of your life you truly need to decide what you will and will not allow yourself to be distracted by. Once you achieve this you will indeed achieve all of your goals being improved relationships, health and wealth.

Take control of you life today and reduce the distractions, focus on what is truly important. Of the people who read this only about 5% will take action, around 65% will take the lesson on board but no action. The other 30% are lost souls who will have no idea what this is all about.

Be in the 5%, I will guarantee you that you will be healthy, happy and wealthy in the future.

Give us a call on 07 4771 4577.

Time To Take Control Of Your Superannuation

By Jason Fittler

How has your super fund performed over the past couple of years?

Not really happy with the performance? Sick of paying fees to fund managers?

Too many people pay too little attention to their superannuation. In reality this is your second largest asset and will be your largest asset by the time you retire. In a Bear market which we are in now if you truly want to make your money work as hard as you do it is time to think about setting up a Self Managed Super Fund (SMSF).

Time to take control of your superannuation.

Benefits

1. Lower fees – if the combined super balance of yourself and your spouse is more than $200,000 you will pay less fees inside a SMSF.
2. Control – in a SMSF you can decide what to invest in, be it shares, property or cash.
3. Gearing – you can gear up your super fund, this will over the longer term provide a better result.
4. Better return – lower fees and a better choice in investments will yield you a better overall return.

Many of you would be invested in Industry Super, do you know what you are invested in?  Do you know many of the investments held in Industry Super funds are rejected by professional investors.

Do not rely on the government to look after you in old age.

Take control of your super now.

If you are interested in getting a better return for your super give us a call and we will explain the benefits of a SMSF for you. Ph: (07) 4771 4577

Safety in The Market

By Jason Fittler

Once again this week the Storm Financial collapse has raised its ugly head.

This article is not about the payout but about how you can make sure that this does not happen to you.

There are some simple steps to protect yourself when investing in the stock market.

1. Make sure all of your investments are held in your name. Sounds simple but you will be surprised how many investors lost money through having their shares held on trust.
2. Make sure you have regular updates from your adviser, either through monthly reports or online access to your portfolio.
3. Understand what you are invested in, this is easy with direct shares and property but more difficult when dealing with Trusts, Managed Funds and Super Funds.
4. Make sure your adviser knows you and you them, keep in front of your adviser. Make regular contact, do not just wait for them to contact you.
5. If borrowing to invest make sure that you are involved with the lending process, do not just let your adviser take care of it. Read the documents and know the risk.
6. Never sign something with out reading it. Get legal advice if you are unsure on anything. Legal fees are a type of insurance.

All too often investors skip some of these steps due to time constraints, you work hard for your money you need to take the time to make sure it is being looked after properly.

The 10 Most Common Mistakes in Investing

By Jason Fittler

Stock Market Mistakes to avoid.

1. Treating stocks like property.  You should never buy stocks and simply just hold. You must keep up to date with what is happening to your company.  Companies are living breathing entities; in short they are people making decisions - some good, some bad.  A house is a lump of concrete which goes up and down based on the economy, a company can change focus and the price can over shoot, as such regular monitoring of your stocks makes sure that you take advantage of the opportunities and cut any losses.

2. Focusing on transaction costs not profit.  If you’re worried about the transaction costs on a investment chances are it is not a good investment. Profit is what counts not costs.

3. Trying to cherry pick only good investments. What happens in the market is out of your control, to reduce risk you need a diversified portfolio. Some shares will go bad it is a fact of investing, deal with it and move on.

4. Buying hot tips. You might hear one of these a year. I hear about 20 a week. 99% fail.

5. Using discount brokers.  Yes they are cheap, but you need to put in considerable time to make sure you have researched your stocks and keep up to date with current issues in regards to your stocks. If you do not work this would suit. If you do work, always consider if you will make more money working a little longer and paying someone to look after your investments or by spending your time on doing the investments yourself.

6. Buying magic software. (Charting programs) These are a scam. If the program was fool proof why sell it to the public you would make way more money trading with it.

7. Holding bad stocks.  If a stock does not turn out how you plan, sell it and move on. Nothing is gained by holding.

8. Not taking profits. Do not hold a stock and try and suck out every dollar. If you make a good gain take it and move on. You will never go broke taking a profit.

9. Not sticking to the game plan.  If you buy a stock for a short term gain, only hold short term. If the announcement does not come, get out and move on. If you are buying for a long term hold and the price dips, continue to hold for the long term. Stick to the game plan, know when you will sell before you buy.

10. Taking advice from the media, friends, family or taxi drivers. Get professional advice. Do the research or pay someone to do the research. Investing is a long term full contact sport.

Are you making any of the above mistakes?

We are always ready to help. Give us a call (07) 4771 4577.

How Much Wealth You Accumulate Depends Largely On How Much You Spend

Spending Patterns

By Jason Fittler

Why is it that we spend more money on our loved ones at Christmas? Why not buy our loved ones presents whenever the mood takes us? Simply put – conditioning.  We are told each year that we should buy people presents on their birthdays and Christmas, eggs at Easter, flowers on valentines day and gifts on Mothers and Fathers day.

Do not get me wrong, I am not saying we should not buy presents for family and friends but merely pointing out how we are conditioned to spend. Some people find comfort in buying new things others relieve guilt from not spending enough quality time with their family by purchasing them presents. Whatever the reason, all of us have a spending pattern. What is important is to identify this pattern and control how we spend our money.

Accumulating wealth depends largely on your spending patterns, those who spend more each year than they earn will quickly go broke.

Since early 2000 this was the case for most Australians and Americans, this is why lending climbed to new levels and personal households debt levels climbed. When an economy bottoms (much like we are about to experience) you see the effects of living outside your means. Those who adjust to the new economic constraints, will survive, those who do not, will go broke.

The important thing is to change your spending patterns and not dip into your savings to prop up your lifestyle. Downturns in the economy can last many years, and will consume all of your savings. Most importantly make sure you continue to invest, it is true that in economic downturns, investments are cheap. This is due to people selling assets to maintain lifestyle.

Things to look out for in an economic downturn.

1.    Higher interest rates – when the interest rate moves up increase your payments to the bank by the same proportion.
2.    Holidays – take a look around the world, during these times you can normally get cheap flights. Also look to go to countries with devalued exchange rates. (The USA comes to mind right now)
3.    Gifts – buy quality not quantity.
4.     Food – cut out the junk, you will save money and weight.
5.    Credit Cards – pay them out each month or cut them up. It is not a time to live on credit, the interest will kill you.
6.    Motor Vehicle – think repair instead of new. If you must buy, second hand will save you thousands.
7.    Media – do not spend because the media tell you the economy is recovering, they do not have a clue.
8.    Investing – continue investing, assets you buy now will be the ones that look after you in retirement.

Our wealth is directly in proportion to our spending or saving habits, never lose sight of this. Long term care and attention to your spending habits will provide you with a wealthy retirement.

My favorite saying is “Look after the pennies and the pounds will take care of themselves”

Have a good Christmas.

Think Global, Act Local

By Jason Fittler

Emissions Trading Scheme (ETS), is going to be a big part of our lives and economy in the future. Regardless of your views on global warming, the reduction of pollution is a good thing.

But what is the best way to achieve this?  I believe in thinking global and acting local. Do what you can in your world, at home in the office or within community groups to reduce pollution.

When we move to the world stage my thoughts turn to investing, there is no doubt that an ETS will be brought in, but how is this going to affect your investments? What we do know is that the cost of living will increase, there is no way around it and here is why.

To produce a Mega Watt of electricity via a coal power station costs $25, via a gas power station costs $40 and wind costs $100. The government has already passed the CPRS (Carbon Pollution Reduction Scheme) where by 2020, 20% of the electricity sold needs to be sourced by renewable energy. If the supplier of the electricity can not do this, then they will need to purchase credits to offset the non-renewable energy they’re using above 80%. At present these credits cost around $30 per mega watt, I would expect this to increase to $40 over time.

By doing this the government is making Wind Power more competitive with coal, keep in mind that the government is giving wind farms $30 credits to sell for every mega watt of electricity they produce, this reduces the cost of a mega watt of electricity from a wind farm down to $70.

So how do you position your portfolio to benefit from this change? 

The two key picks are Origin Energy and AGL Energy, they are both well invested in Gas and Wind farms.

Next stock I like is a company call Infigen Energy which is focused in the wind farm sector. The Geothermal sector is a more speculative play, it has the potential to produce base load electricity something which wind can not do right now, the problem with this sector is that they are unable to prove the technology, if they do, great gains will be had.

The carbon storage sector is also a good play, you can gain exposure here through CO2 Group Limited, this is where they store carbon in trees. Origin and AGL have contracts with this company.

What about Nuclear energy?  This is by far the most efficient way to produce electricity, however, the government is determined to exhaust every other avenue before going down this road. It will also take 10 years from commission to product of a Nuclear power station and the cost for construction is much higher than a coal fire power station. The best play in the sector is Paladin Energy Ltd.

As for Coal, the three best things are it is cheap, cheap, cheap but I suspect that these companies will have major capital costs in the future. As such hold these for the income, as it will take a decade before the real impact of the changes are felt by these companies.

For more information on any of the above companies, give us a call (07) 4771 4577.

Passion

By Jason Fittler

Do not spend your whole life waiting to find your passion. Passion does not come from divine intervention, it comes from commitment.

Make the commitment to those people and pursuits which are important to you and passion will find you.

I suspect most people are not passionate about superannuation, shares, options, warrants, term deposits, economics, managed funds, exchange rates, transition to retirement pensions or investments.

I bet you are however passionate about what you can spend your money on, things such as holidays, cars, boats, family, friends, property, jewellery and retirement.

I however, take a laptop on holidays, log in to the market every day to keep in touch with  what is going on. I sit up late at night to read the latest prospectus or research on a company.  Reading the financial review to see what happened yesterday and to keep abreast of the latest news is a morning ritual, I can not start the day without it. (I do not drink coffee)

Finance is not a job for me it is a lifestyle and I am not alone. We do this job because we love the job, we are passionate about the job. It is much a part of our lives as breathing.

I remember the first time in primary school when the Commonwealth Bank came to our class, we received a free piggy bank (you remember them, they look like a small bank, were made of tin and had no hole in the bottom to get your money out, if you wanted your money you had to cut them open) and a ruler. There is a common saying amongst stockbrokers, “he will retire when he is dead”, investing is very much a part of our lives.

Message:
If you are not passionate about investing, find someone who is, have them look after your investments, leaving you time to pursue your passion.

(Beware of the adviser who is passionate about money, this is totally different to being passionate about finance)

Should You Invest in the USA?

By Jason Fittler

Hindsight is always perfect, with hindsight we can see the mistakes we have made.

But this is not the purpose of hindsight. I think hindsight should be used to make observations on the future.

Australia has seen a fantastic recovery over the past 6 months. Profits have been made, retail sales in Australia have recovered quicker than the rest of the world. We are now worried about inflation, interest rates have moved up with it our dollar.

In hindsight we all would have invested the farm back in March 2009.

Australia is only 3% of the world markets, the largest - the USA - is yet to see retail sales bounce like they have in Australia, interest rates are still low, companies have not gone through the capital raisings we have seen and their dollar is weak. Does this sound familiar?

Think back to March 2009 and the same was being said about Australia. Given that the USA has not seen the economic improvements of Australia and now knowing what these improvements meant to our market, we should use hindsight to take advantage of the gains to be made in the US.

There are two key reasons to invest in the US.

First, at some point in the future retail sales will improve over there, with it we will see some positive economic growth.

Second, our dollar is sitting at the top of the range, if the US dollar starts to strengthen this will benefit your overseas investments. I think right now is a good time to start building exposure to this market.

Do not bet the farm, but look to be involved. 

Hindsight will let me know if I am right.

Double Gearing

By Jason Fittler

I often wonder if the founders of Storm Financial really thought about the negative side of naming their business Storm, given the now destruction it has caused. One of the fall outs of the collapse of the Storm Group is the new legislation on gearing.

First you need to understand the model,

1.    borrow as much as you can against the equity in your home.
2.    invest these funds into index funds and then borrow as much as you can against this investment.
3.    if you have any capital growth, borrow against this equity as well.

This is called double gearing. 

The government has taken steps to make sure that this structure is never used again. It is obvious that this is a high risk strategy, in positive markets you have great gains and in negative markets you risk being wiped out.

In turn, gearing is now considered a bad strategy; this could not be further from the truth.

Gearing is a genuine strategy to improve your overall return if used correctly. The issue with Storm was not the strategy it was the adminstration and products used to execute the strategy.

In the current market we are currently coming off a very low cost base, those of us who have used a gearing strategy over the past 6 months have done very well for themselves. But how do you gear up your portfolio while limiting your down side?

Warrants – in this market my favourite product is the self funding instalment warrant over an index fund. This product gives you the protection of a stop loss, a low interest rate the same as a margin loan, the benefit of better up side in a rising market and the benefit of lower fees.

We will be releasing a video on our web site in the coming weeks to talk about gearing through self funding instalment warrants, specifically in relation to index funds. If you would like to take advantage of this product make sure you take the time to watch. It will only take around 10 minutes, but I guarantee it will be the most productive 10 minutes you will spend that day.

PS. If you would like a jump start on warrants, give us a call (07) 4771 4577.

Risk

By Jason Fittler

It is only when we are faced with loss, that we start to understand what level of risk we are really prepared to take.

There have been many opportunities in the market over the last 100 years to find out exactly what level of risk you are prepared to take. The most recent, the Global Financial Crisis, has once again highlighted the definition of risk.

Money is made in direct proportion to the level of risk you can handle.

Money is lost when you do not invest at your risk level.

Let me explain, in good times when people are making lots of money from investments, greed takes over, it’s not that you want more, it’s more that you feel you are being left behind. Most investors are more concerned about missing out than they are about the risks they are taking.

The effects of this sort of activity is felt when the market turns down. Now large losses are occurring.  When you look at how much you have lost you have the falling feeling in the pit of your stomach. This is your body’s way of telling you that you have invested outside of your comfort zone or risk level.

Compounding your losses is the next stage of investing outside of your risk zone. Now that the walls are closing in, failure is in the air, all you want is for the losses to stop. Once again you act outside your risk level and move your investments to cash. You have now effectively destroyed any chance of making back the money you have lost.

Strangely, this decision to move to cash is made at the bottom of the market.

The repeat offender, the investments will then remain in cash until almost at the top of the next cycle when once again the investor is concerned that they are missing out.

To avoid the above mistakes it is important that you understand your risk profile, take the time and effort to do this and you will 100% of the time grow your wealth at the perfect rate for you.

You will at times make less then others, but you will resist the urge to change your investment style.

Other times you will make more, but once again you will resist locking in your gain and moving to cash. Staying the course will produce the results you are looking for.

Investing is not a group sport, it is not a race, it is a journey to the destination of your choice.

PS Before you invest find out your level of risk. Give us a call (07) 4771 4577.

Shareholders Benefits

By Jason Fittler

Some listed companies offer shareholder benefits as a means of attracting new investors whilst fostering loyalty and support from existing shareholders.

The benefits  schemes  are  welcome  but  should  not  outweigh  the  more  important considerations of the risk of the investment and future growth potential.

Below we list some of the companies that are offering shareholder benefit schemes.

To see if you are entitled read the attached PDF.

Is Your Super Enough?

By Jason Fittler

"If you do not take care of your super, it will not take care of you."

The average Australian wage is $57,000 pa, lets assume that you receive this amount for 35 years from age 30 to age 65. Each year you would receive $5,130 super contributions, if you compound a return of 8% pa on this investments this would give you $880,000 in retirement. Adjusted for inflation of 3%, you would have the same as $312,000 today.

Could you retire today on $312,000? On an average return of 8% this would give you a pension of $31,000pa for 20 years. This is 45% below today’s average income. In short, yes you could live on it but your life style would suffer.

Many people believe that their super will take care of them in retirement, the simple fact is, if you do not take care of your super it will not take care of you. I hear a lot of arguing about Industry Funds verse Retail funds, the main issue is fees, industry funds are cheaper.

At the end of the day it is like two fleas arguing about who owns the dogs they live on. To enjoy your retirement you need to do more. Fees are irrelevant, net return and savings are important. To achieve the lifestyle you want in retirement you need to put more effort into your super, this means stop spending as much as you do and start saving.

To retire with the same as today’s average wage you will need $560,000 today dollars in your super fund. In 35 years you will need $1.5 million.

To achieve this you have one of two choices;

1.    Increase your super contributions from $5130 to $8700 pa. You could do this through salary sacrifice and save tax. In real terms this means salary sacrificing around $68 per week.
2.    Achieve a better overall return in your super fund, if you could achieve a net return of 10.55 as opposed to 8% you would achieve the required $1.5 million super in retirement.

If you did both you would end up with $2.6 million giving you a $92,000 income in today’s dollars, this is a 61% better income than what the average Australian receives now.

Message

Stop worrying about the fees you pay and start worrying about what advice you are getting. This advice was given to you for free, for those who listen you will have a great retirement. For those of you who understood, then seek and pay for advice you will have a far better retirement.

What sort of retirement will you have?

If you would like to learn more, give me a call on 07 4771 4577.

Activity Based Investing and Cost Based Investing

By Jason Fittler

Have you been told by a financial planner, investment adviser or stockbroker that you can expect to receive an average return of 8% per annum? 

When we take a long term result and average it out over the number of years we come up with a Cost based investing return, or the average. Although this is useful in estimating return it really has little to no bearing on what your actual return will be.

Cost base investing seems logical and easy to understand; however, when you have down turns in the market this method of estimating your returns comes unstuck.

Activity based investing is a better measure of performance and will over the longer term produce a better overall result. Activity based investing only calculate returns for year to year, there is no long term average return only real returns. Take a look at the below graph of the return in the All Ords over the past 30 years.

 

This is not a smooth line showing regular increase in your portfolio. As you can see some years have had good returns others no so good.

A cost base investor would have continued to hold their investments during these ups and down looking for that average return. An activity based investor would have changed there investment style to suit the market, selling down their investments into cash when the market was producing an above average return and buying back in when the market under performed.

The activity based investor will always produce a far better result. Keeping in mind that both investors have the same fundamental belief that the market over the long term will go up.

I will have more information out on activity based investing in the near future.

PS. If you would like to learn more RIGHT NOW... give me a call on 07 4771 4577.

The Fundamentals of Margin Lending

By Jason Fittler

Understanding the fundamentals of margin lending is very important for potential investors wanting to enhance their financial position using this strategy. When used correctly, margin lending can represent an attractive and worthwhile long-term option for investors.

For all the details please click here and downlaod the PDF.

If you would like to learn more give me a call on 07 4771 4577.

Self Funded Installment Warrants

By Jason Fittler

Over the past couple of weeks we have seen the market rally, this has for many of us seen good gains in our portfolios. But how do we…

1. Maintain our level of exposure to our current stocks?
2. Extract money to invest in further stocks?
3. Avoid margin calls or borrowing against our house?
4. Still receive the full dividend entitlement?

A Bear market provides great opportunity to buy into undervalued stocks which will in the long term provide great capital gains.

Over the past week I have been using Self Funding Installment Warrants to achieve all of the above, this has provided me with the cash I will need to buy bargains when they become available.

If you would like to learn more give me a call on 07 4771 4577.

Self Managed Super Funds:- Are they for you?

By Jason Fittler

Below are the benefits of having a self managed super fund.

1. Lower costs.
2. More control over your investments.
3. You can gear up your investments through specialised products.
4. They are nimble, you can buy and sell and take advantage of market opportunities when they are available.

Self Managed Super Funds are becoming more popular in the current market environment as people are taking control of their future. This trend will continue to grow over the next decade.

We are in a stock picker market, to do well in this market you will need more control over what you are invested in, to do this you need a Self Managed Super Fund.

If you would like to squeeze more out of your super then give us a call and we can see if this is for you.

Give us a call 07 4771 4577.

Superannuation, Is It Worth It?

By Jason Fittler

Super funds are currently preparing their end of 2009 tax reports. You are not going to be happy with the results.

The market fell from 5100 points to 3900 points or 23.5% over this period, some sectors such as the property sector fell 46% over the same period.

Many people will only now find out, how they have been effected by the fall in the market. This will in a lot of cases lead to a feeling that super is not worthy investment. It will also lead to people drawing the wrong conclusions about super and making rash decisions which will cost them a lot more over time.

Tips and Traps

1. Super is the best environment to have money invested in at present. It has a low tax rate and provides you with tax free income in retirement. You would have lost just as much if the money was invested outside of super, it is not the vehicle but the investments which have dropped.

2. Salary Sacrificing into super is still the best way to reduce the amount of tax you pay.

3. All super funds lost money, industry super did not out perform. To understand how your super fund performed you need to understand what they are invested in. See note below on industry super funds.

4. Do not complain about fees to advisers, now is when you really need their advice. Go it alone now and prepare to be poor. It is easy to complain to your adviser, but the drop in the market happened to everyone. What is important is what you do now, a good adviser will make back your money through restructuring your portfolio.

5. Do not cash out of the market, those who cash out over the past 6 months have missed a 35% gain and a chance to make back their losses.

6. Restructure your portfolio, get rid of the dogs and buy into the investments which will recover first. Holding a dead stocks is like is like putting lipstick on a pig, at the end of the day it is still a pig.

Listed Assets Vs Unlisted Assets

I hear people tell me all the time that their super fund out performed another, but to truly know this for sure you need to take a look at the assets held by the fund. Break the assets down into listed assets (those listed on the stock exchange) and unlisted assets (those not listed on the stock exchange).

Listed assets are priced daily, as such it is very easy to value these assets on a daily bases. Unlisted assets are normally only valued when they are sold or every 3-5 years, as such it is not easy to know at any one point in time to know what that asset is worth. Now here is the trick.

If a super fund holds a unlisted assets and they believe that it has gone up in value, they are likely to have that asset revalued as at the end of the financial year so that they can report that gain in the end of year financial statements. This will increase the over all return of the super fund.

However, if the unlisted asset is thought to have gone down in value they may not have it revalued as such they do not report the loss. Producing a better result then what has occurred. The other issue is that a valuation is only subjective as such may not reflect the true value of the asset. So before you simple compare the return of one super fund to another make sure that you take a look at how the return has been calculated. Compare apples with apples before you make any rash decisions.

For most people in a Industry super fund you have no other option. As such you really can not withdraw your funds out and place them with a retail fund. This is called sticky money. This sticky money also improves the performance of the industry fund, as regardless of the result you can not take your money anyway.

On the other hand if you are in a retail fund which has not performed you can switch to another fund straight away, the withdrawal of funds from a fund will also effect the performance of the fund as it forces the fund manager to sell assets at time which might not be best.

Sticky money is another factor in the industry fund myth.

Moral

Keep putting money into super regardless of the 2009 result, your super will look after you when you retire.

Where Do You Get Your Advice?

By Jason Fittler

In a recent survey completed by the Australian Stock Exchange, it was found that at present only 29% of investors get their advice from financial planners or stock brokers. While a whooping 48% of investors get their information from Magazines, Investment Newsletters, the Internet, Newspapers or Family and Friends.

Putting this in context around 50c in every dollar which is invested is done so without any professional advice. The All ordinaries is worth $1.1 Trillion, which means that $550 Billion is invested with no professional advice at all. And you wonder why there is a financial crises!

Would you self diagnose yourself if you were ill? Of course not, you go to a Doctor.

Why people risk their financial future to save a few dollars I will never know.

Of this 48%, 13% of investors rely on advice from family and friends. The positive is that this figure is dropping, but more investors are relying in the Internet 13%, Newspapers 15% and Magazines 4%.

What do these three medians have in common, they are designed to sell advertising space, not provide professional advice.

DIY has no place when it comes to something as important as your financial future. I will leave you with some advice which has served me well.

“If everyone agrees something is right, chances are it is not, the majority is generally wrong.”

Time in and Timing, What’s the Difference?

Depends on who is trying to sell you what!

By Jason Fittler

Time in the market – this term is used when speaking about passive investments. It is a reference to the fact that over the longer term your investment will provide you with a good overall average return. Why? Because over the long term the price of investments generally go up. This term is most readily used by managed funds and sellers of index funds, no value is placed on activity or effort, the underlying belief is that you can not out perform the market.

Timing – this term is used when speaking about active investments. It is a reference to the fact that if you buy and sell your investments at the right time you will produce a far superior return. I.e.: By timing when you invest and when you take profits you will outperform. This term is most readily used by stockbrokers and real estate agents. The underlying belief is that by putting in more effort and research you can out perform the market.

So, who is right?

You are! Investing is about you, not about the investment adviser who is trying to sell you their product. Before signing up you need to decide how you like to invest, take a good look at yourself. Get this right and you will make money either way.

A good investment adviser will first spend time getting to know you, this way they make sure you invest in a product which best suits you.

Beware of the investment adviser pushing one product; it is all about them and little to do with you. Long term this will not be a good relationship.