Investment advice that your financial advisor should tell you, but hasn’t

3 Nov 2015
The real aim of prudent investment isn’t to get rich quick, but rather to make sure you save money for your retirement.

To do this you need to ensure that your money holds its value against, or preferably outpaces, inflation. Some of the most sound investment advice is really just good common sense. Here’s some investment advice you need to consider:

Don’t pay too much to invest: Be aware of your costs.

Brokerage fees charged by stock brokers and financial advisors can add up and, if you’re not careful, end up costing more than any gains you stand to make. Be aware of what commission your broker takes every time you sell or buy a stock and look out for advisory fees, even a small percentage can add up to a lot in the long term. It’s also important to realise that costs change over the years. Just because the costs were low on a fund when you initially invested in it, doesn’t mean that the costs will remain low. In short, always keep track of where your money goes.

Mix things up a bit.

One of the most reiterated pieces of investment advice is to diversify your portfolio to limit your risk. Mix up your investment portfolio by making sure you have a range of investments across asset classes – gold, bonds and stocks. It should also include a mix of assets timed to appreciate along different time lines. This will help you to avoid having all your investments maturing at the same time – a time when the market might be taking a dip.

Investment advice that your financial advisor should tell you, but hasn’t

If it sounds too good to be true, it probably is.

Hot stock tips that make the rounds in business websites, magazines and the like should be studiously ignored. In the time it takes a journalist to research and write up an article the “hot” tips they allude to will already be common knowledge and will probably have substantially risen in price. Rather bide your time and see how the stocks perform over the next few months and wait for the price to drop before deciding for yourself if the investment advice is sound.

Limit your risks.

As you get closer to retirement you should start minimising your risk. Make sure a large portion of your portfolio is invested in something safe and solid. You might not stand to make the large gains you potentially could with riskier investments, but then again, you want to make sure your money stays safe for when you need it. Now’s the time to look at a low cost, passively managed life-cycle fund.

Consider other forms of investment.

Buying property in a prime location is among the best investment advice you’re likely to hear. By investing in seaside apartments in Calpe, for example, you can get an immediate return through holiday rental income. By the time you are ready to retire you could have paid off one, or even two, apartments in Calpe and make your move to the seaside paradise for good.

Find out more about property in Calpe for the discerning retiree here: Grupo Esmeralda.

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