On the way to planning our retirement, some of us take a misstep because we trust the words and hype of someone offering investments.
Whether it be mortgage debentures that fold, time shares/hotel clubs, off-the-plan developments that sink once bought, or just plain scams, a setback like this can cost you many thousands. Losing part of your nest egg is emotionally devastating as well as detrimental to your level of comfort whilst retired.
There is a simple rule you can use to prevent this pain. It's as simple as asking yourself: "is this decision powered by fear or greed?"
These two enemies of wealth will both get you in trouble - you may be torn between hope and doubt in an effort to save more for retirement.
There is always the option to seek the opinion of a licensed financial planner and, if hovering over a contract, also a solicitor.
When you want tax advice, you might need your accountant to calculate cash flow, but if you want the opinion on the actual investment itself - then only financial advisers with a RG146 can help you, under the law. We have several here, from the team at Lifetime Wealth Partners.
This step of asking for advice can give you much-needed time to do you due diligence and find out what the investment is -- when your mind is not caught up in exciting visions of compounding growth or lazy beach holidays. (Incidentally, many of those holiday club apartment time shares make shockingly poor investments.)
No matter what pretty graphics or strong growth projections are parried about, it is important to take time to remove caught-up emotions and ensure any new investment is based on solid fundamentals, like a history of growth, steady dividends, not too much debt, and good management.
What if You've Been Burned Already?
If you've already taken the plunge and bought a dud investment, try not to let it spook you from all forms of share investing, property investing, or other types of funds. Not all are created equal.
If the Royal Commission had you worried, then Noel Whittaker advises you to become engaged in your Super again, understand the fees, and use it for the growth and wealth-building tool it can be. (See Courier-Mail, 2 July).
And if you want a holistic look at your retirement and wealth goals, it might pay to get a financial plan with a licensed financial adviser. Twenty years or so out from retirement is ideal because your family has time to change things in the right direction and ride out the blips of a downturn.