Modern technology allows us access to more information than ever before. However, this information is not always factual and often simply opinion.
And with so much investment information available, how do you separate fact from fiction?
There are a number of steps you need to undertake before you jump on the keyboard and start looking for ideas of how to create wealth.
When you invest your money, keep in mind, someone is getting richer, and it may not be you!
1. Consider your objectives. The more specific the better. Getting rich or wanting to retire are not objectives they are wishes. Objectives need to clearly outline what you are setting out to achieve. For example, in order to retire I need to have at least $50,000 income each year for living expenses on the provision that the kids have left home and I have no other debts.
2. Education is the next step. Education needs to be obtained independently before seeking advice. The goal of education is to ensure that you are armed to ask well-informed and considered questions to those providing advice. With education, seek opinions from many different sources; perhaps enroll in an online course. If you are looking to retire then enrolling in a course on superannuation will give you the tools you need.
3. Selecting an adviser. This is a time consuming process and will require you to speak to a number of advisers. Do not fall into the trap that they are all the same. Advice is separate from product. When speaking to a financial advice ensure that they are speaking about strategy, and not about their products. Products should fit the advice. Advice should never fit the product. One of the big traps in the investment industry is when a sales pitch is dressed up as investment advice. Thing to look out for are:
a. Seminars, that are more motivation than advice. If they are full of hype and fist pumping then it is most likely a sales pitch.
b. The advice is focused around one product. Advice should be focused on strategy, not a product. Once the strategy is right then turn you attention to the best vehicle to achieve the strategy.
c. Cold calls. Advisers who come to you. Act now or you will miss out deals. Latest fads. These are all red flags, and should always be looked at carefully before you hand over your hard earned money.
4. Clearly commutating your requirements to the adviser. Make sure that the adviser clearly understands you and your needs. To do this you must invest time and speak freely. No matter how dumb you think a question might be, make sure you ask it. This allows a good adviser to assess your level of knowledge and better understand how they can help you.
Stay tuned for Part 2.