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INVESTMENTS
Good
by GORDON BENNIE
DIRECTOR,
Investments
Premier Asset Management Ltd
Investors want to know the best thing to do with their just 3.2%. Crikey, so less than 5% of investors got it bang
money. They want the best product for their tax on, with less than a fifth picking the top three asset classes.
situation, they want the best value version of that That looks a lot like guesswork to me. Those asset classes
product and they want the funds it invests in to perform will all have different performance figures shortly and I
brilliantly. doubt investors will be keeping abreast of the changes in
the markets, so they’ll probably be guessing wrong again.
Great. Demanding, aren’t they? Difficult too. Naïve and
foolish, worrying too much about what they want from So what would we advisers have had you do?
their money - they simply can’t have everything. A good professional adviser would have ensured his
clients had a diverse spread of investments in several of
But they are quite right in their expectations; it’s not these asset classes, which for the figures above, and
unreasonable to expect to receive good quality advice, good considering a moderate risk UK client, would most likely
value products and good performance. And of course they have resulted in an average gain of 18%, or £9,000 from
should worry about their money, they’d be silly not to. £50,000 invested – not the best return, but quite acceptable
given the risk status of the client.
They are, in reality, the majority of people - you and I, your
mum and our friends – and they are perfectly entitled to It’s impossible to get it right all the time. It’s hard to get it
make good investments. right most of the time. It’s easy to pick last year’s winner
and ‘bet’ heavily. But when last years No1 goes in the
Good investments aren’t so far from our reach, particularly opposite direction, investors become very unhappy. In
in terms of taxation and products. If an adviser does his actual fact an investor’s emotional response to loss is
homework investors should get the best product because increased by a factor of ten, when compared to his
the research has been done, and they will get good value emotional response to growth.
because the adviser will appreciate their continued
business. So we can scale down the worrying, as just by In part a solution may be to get realistic about our goals
choosing a good adviser who works hard for his or her and expectations, and how these gel with our actual risk
clients, half the work will be done for us. appetite and understanding of the markets, before we
venture in. Most people don’t really want high risk - some
Good investment performance is clearly much more think they do but actually feel very uncomfortable when
difficult – no amount of homework and good service is the negative side of risk shows itself. I for one would
going to lead to clairvoyance. prefer to feel comfortable and in being so sacrifice a little of
the upside of risk - my fingernails are bitten quite enough
So what’s a ‘good investment’ right now? already.
I read recently that nearly a quarter of UK investors
believed that buy to let residential property would show We also have to establish what good performance means to
the best investment returns over 2006. us, and in particular a time frame to achieve that
performance. Most people are prepared to invest for the
Research carried out amongst over 2,000 investors, on longer term; over this time period markets will rise and fall
behalf of a leading fund manager asked investors to predict perhaps many times. The longer we hold our investments
which asset class would perform the best over the coming the more likely the average growth will be positive and
year. Of these, 24% opted for buy to let, and 49% said they attractive.
did not know. More than 10% chose commercial property as
the best performer, 5.1% opted for UK equities, 4.6% global I believe the best investment we can make is in a good
equities, 3.7% cash and 3.2% chose bonds. quality professional adviser, who listens to us, who helps
us to understand, and who researches concepts or methods
When this survey was concluded the best performing asset to reduce the risks associated with the markets we
class was global equities with a rise of 23%, followed by UK consider.
equities at 22%, commercial property was third with an
18.8% rise, bonds were fourth at 10.6% for corporate bonds, It won’t surprise you to learn that I’m demanding and
7.9% for gilts, cash was fifth at 4.7% and buy to let sixth at difficult too.
20/20 twelve
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