It’s ‘World Investor Week’ this week, and ASIC have put out some practical tips that are worth keeping in mind, even for experienced investors. “Smart investors don't rely on good luck; they plan, research and understand their investments and how they fit with their financial goals”, was the message from ASIC Deputy Chairman, Peter Kell.
Here are ASIC’s golden rules for protecting your investments:
- Review your investment needs and goals to develop the right investment plan for you;
- Understand how risky the investment is and decide how much risk you want to take on;
- Use ASIC's Professional Registers to check if the company or investment scheme is licensed by ASIC;
- Find out how the investment product or company works and how your money will be invested;
- Read the product disclosure statement for each investment product to understand the product's features, fees, commissions, benefits and risks;
- Use diversification to spread your risk between different asset classes;
- Watch out for get rich quick schemes, know the signs of an investment scam and check ASIC's MoneySmart tips on avoiding scams.
This author would add one rule to the list; no matter how good an asset is, there’s always a price that’s too high. Conversely, at a low enough price, even a poor asset can make a good investment.
What are your top investing rules? Let us know in the comments below.
Patrick was one of Livewire’s first employees, joining in 2015 after nearly a decade working in insurance, superannuation, and retail banking. He is passionate about investing, with a particular interest in Australian small-caps.
I have to take a big risk to make big money. Many big risks = diversification, But keep it realistic futuristic.