Investment Articles

Not long ago investing was easy. There were few places you could invest and if you had money you wanted to invest, you left it to the professional stock brokers. However, deregulation of the financial markets has changed all this. In the past 20 years new investment products have been launched, changes have been made to the tax systems and retirement plans which have altered the attractiveness of many investment products.

Up to about 20 years ago, share investing was purely in the domain of the wealthy. For most people it was difficult to trade in overseas stock exchanges, there were no such thing as cash management trusts, installment warrants, exchange traded options, dividend imputation, reset preference shares and endowment warrants – to name a few. Now about 50% of investors are “mums and dads” investors who either own shares directly or in managed funds. Unfortunately, in recent years many investors have been “burnt” because they did not understand the risks of investing in financial markets.

Governments around the world have made it clear that it is important for people to take control of their own financial futures. The sustainability of government funded pensions is under pressure. If you do not save and invest, you will suffer a significant decline in your retirement living standard. The average life expectancy is about 80 years, so if you retire at 60 years of age, the savings you have accumulated in the 40 years of your working life will need to fund your retirement of 20 years or more.

Deregulation of financial markets, interest rates and currencies means that the market determines the value of investments and not government decree. This provides opportunities for educated investors to build wealth and for unwary investors to lose wealth. You must understand the opportunities and risks.

The ground rule is that if you want to be a successful investor in financial markets, you must educate yourself about investing. Even if you put your faith in a licensed investment advisor, not all are competent. It is essential that you understand how the financial markets work so that you do not put your hard earned money in the hands of an incompetent advisor who is only interested in the commissions available. How can you tell whether a particular investment is right for you? The only sure way is to become familiar with the language used in the financial industry and to have a sound investment strategy. Does this mean that you should keep you money safe by putting it under the bed or keeping it in the bank? No – but you do need to understand the risks involved and set ground rules for successful investing.

There are a number of ground rules in investing that haves stood the test of time. With time, patience and effort you can become a successful investor in all the areas that are open to you. This will not come overnight and you will have to be prepared for that fact there will be times you lose money. However,perseverance is a virtue above all others. The road is not always easy, but nothing worthwhile is.

Here are the ground rules for successful investing:

1. Be your own investment manager. No advisor or stockbroker should do it for you. Only you know what your real needs are, what your temperament is – and only you are motivated by your own best interests, not sales commissions. It is also more fun to do it yourself.

2. Confront risk and then reduce it through spreading your investments.

3. Take a contrarians view to investment markets. That is, look for opportunities and do the opposite of what everyone else is doing.

4. Do not be put off by investment jargon. Master it instead.

5. NOW is the best time to start investing. Do not wait for the markets to improve. If the share market is filled with gloom, that is the time to buy.

6. Make good quality shares the core of your investment strategy. Then you can rest easy when you invest in more speculative areas.

7. Always consider tax implications of making investments but never let tax minimization be the main objective. The fundamental rule is to think in terms of after-tax returns.

8. Keep up to date through reading the financial papers and searching independent investment research websites.

9. Discussing investments is stimulating. Condition your mind to talk to others about investing, especially people who are more experienced and knowledgeable than you are.

10. Do not be greedy. Discipline yourself to cut your losses with bad investments and cash in when you have made a reasonable profit.

11. Be patient. Rome was not built in a day. Similarly, you may not become wealthy overnight, but you will over time.

12. Never invest in anything you do not understand. If a particular investment sounds too good to be true, it usually is.

13. Pay yourself first. Most people invest money they have left over after paying the bills. Allocate yourself the first 10% of your monthly income to build up your investment capital. By doing this you will force yourself to become an investor and the long term benefits will be enormous.

If you master these 13 ground rules, you will be a successful investor. You will rival so-called professionals and will sleep easily at night knowing that money is the least of your worries.

Probably the best investment management tool that I use, this tool makes successful investment management a lot easier when investment markets are challenging. With this management tool you can lower your risk and also profit while others pay the price and lose money. Now it’s time to share.

Successful investment management has eluded all but the most experienced investors for the past ten years. Using the best investment tools out there you could have been one of the few to make money investing without breaking a sweat. Here’s an investment tool that would have worked for you, and should continue to do so in the future. It’s called dollar cost averaging, and the best investment vehicle to use here is a diversified stock fund. So, let’s say you want to set aside $5000 a year to earn higher returns, get growth and accumulate money, perhaps in an IRA retirement account. Here’s how it works.

At the same time each year you send $5000 to a diversified stock fund (no-load variety), no matter what the economy or investment markets are doing. Let’s look at an example somewhat similar to the turbulent times we’ve experienced lately in the USA. You’ve made four yearly investments, and are reviewing the results just before laying down your $5000 for year five. The share price of your stock fund when you bought in over the past four years, in order: $10, $8, $5, $8. As you ponder sending in another $5000, your stock fund sits at $10 a share, right where it was when you got started. You can’t make money investing in a market like this you think… until you look at the value of your $20,000 investment.

Using the investment management tool called dollar cost averaging, you bought the following number of shares from year 1 through year 4: 500, 625, 1000, 625. That gives you a total of 2750 fund shares worth $10 each, for a total investment value of $27,500. The value of your stock fund went no where and you are still $7500 ahead. Very simply, our investment management tool forced you to buy more shares when stock prices were lower; and you bought fewer shares when prices were up. The more volatile and uncertain the markets, the better dollar cost averaging works.

Please pay attention to the following. I mentioned earlier that the best investment vehicle to use here to get growth and make money investing is a stock fund of the diversified variety. Do not use this management tool with an individual stock, or do so at your own risk. Why? Because any stock can go down the tubes and leave you holding a bunch of shares worth absolutely nothing. For this to happen to the average diversified stock fund, the good old USA would need to virtually cease to exist as we know it.

No investment management tool provides you with a complete investment strategy. But if you combine proper asset allocation & diversification, plus balance & rebalance to this one, you’ll be hitting on all cylinders. With good investment management in your pocket the sky’s the limit. Please note that our above example does not even consider the added value that reinvested dividends would have added.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

The pharmaceutical companies seem to be immune to the economic ups and downs that countries across the world go through. Illness and disease are an ongoing thing in life and it is due to this reason that the pharmaceutical companies have always been in business and were least affected by the economic ups and downs that have been experienced by different countries in the recent past. The global economies have been affected by recession, and most of the industries have been affected by the impact of recession. Banks have declared bankruptcy, automobile industry has got affected and even the service sector has laid-off so many people and this has all been a result of the recent recession.

However, the pharmaceutical industry has been able to sustain itself very well during all this time and continues to do so. Although e have seen mergers and acquisitions happening even in the pharmaceutical industry, yet the effect of recession on this industry has been much less when compared with the other industries.

For people thinking about investing in the pharmaceutical companies, there are a few pointers they might wish to know:

· Investing in this companies is not fool proof however if you compare it with any other industry, it would surely be rated as one of the most secure investments.

· Recession has not spared any segment or industry in the market today, each and every industry has felt the impact of the economic slowdown however all the different industries have felt the impact in varying degrees. The pharmaceutical industry has been affected the least but it too has not been able to totally escape the impact of recession.

· Illness and diseases are surely not affected by recession and that is one reason why the pharmaceutical companies have been able to comfortably sustain themselves during the economic slowdown. We have seen pharmaceutical companies merging and have also seen many people being laid off in this industry. Despite of these facts the pharmaceutical industry has shown less fluctuations in comparison to the banking and automobile industries.

· Investing in the pharmaceutical companies is still considered to be a very safe option in comparison to the automobile or banking sector. The reason for this is that the automobile industry has seen the shut down and merging of certain companies and the banking sector has seen the acquisition of many banks and also the filing of bankruptcy by some eminent banks in the past few years. While the pharmaceutical companies have also shown signs of being affected by the economic slowdown the magnitude of impact on pharmaceutical companies has been very low.

Keeping these few pointers in mind the general feeling in the investment market is that the pharmaceutical companies are a decent investment with safe return, especially in today’s economically slow pace. Therefore most people are now skeptical about investing in other industries and choose to invest in the pharmaceutical companies so that they can experience the safety of their investment and not be bothered about a sudden shut down.

To find out more about investing in pharma companies you can go to http://www.medisan.com/. They also provide with many information and tips investing.

While the macroeconomic links between Russia and oil are well known, I believe that it is useful to review how they work. Because Russia produces so much oil and gas, it is the oil price that determines export and government revenues. The ruble is used as a safety valve to control the impact of these factors on the economy, and that, in turn, determines the absolute level of dollar GDP.

THE IMPORTANCE OF HYDROCARBONS

Russia produces just under 10 mln bpd of oil, as Ill as 550 bln m3 of gas (also around 10 mln boepd) and large amounts of other commodities, which in recent years have broadly followed oil prices up and then down. The percentage of Russian GDP made up of oil and gas is a moot point, as much of the hydrocarbon production is sold cheaply on the domestic market, enabling other sectors to reap the benefits. One way around this is to look at the total value at world market prices of the oil and gas sold. In 2008, this was $590 bln, or 36% of 2008 GDP; this year, I forecast it to be $340 bln, or 27% of 2009 GDP.

EXPORTS

Russia exports around 5 mln bpd of oil, 2.5 mln bpd of oil products and 200 bln m³ of gas, generating export revenues of $280 bln from hydrocarbons in 2008, or 63% of total export revenues. Overall, commodities account for more than 90% of exports. As a result, it is the oil price that acts as the key determinant of the trade and current account balances.

KEY RELATIONSHIPS

ˆ Oil determines the reference RTS Index level. For much of its existence, a pretty good rule of thumb for the level of the RTS Index has been 22 times the oil price minus 200. This framework explains not only the 2,000 point fall in the index in 2008

Jeffrey F. Combs, 53, MBA, a veteran of Wall Street (Morgan, Stanley; Lehman Brothers) has been living and investing in Russia since 1995. He is a frequent speaker at Investment Conferences, and considered to be an authority on the Russian and CIS investment markets.

“He who has the gold, makes the rules”, so say many investment books. Being older than printed money and stock exchanges Gold can be a powerful hedge against inflation. In this rapidly fluctuating environment there is one gold investment that’s as solid as a rock – American Golden Eagle Coins. But why would you consider American Gold Eagle coins as part of your portfolio? Let’s look at the main reasons.

U.S. Government Guarantee

The U.S. government guarantees the weight, purity, and content. This unique guarantee ensures that the coins are recognized world-wide as America’s official investment-grade gold bullion. Additionally gold eagle coins are accepted globally in all investment markets.

Performance

Golden Eagle Coins consistently hold their value offering a stable investment. In volatile financial times this makes investing in gold very appealing as price often moves independently of stocks and bonds. If you are looking to a prosperous future consider gold as way of improving your portfolio’s overall performance.

Liquidity and Privacy

Golden Eagle Coins are really easy to buy and arguably as easy to convert into cash at most bullion dealers in part due to the U.S. Government Guarantee and global recognition. When you sell you can sell with peace of mind knowing there will be minimal delays and your sale (and indeed you original purchase) is private and non-reportable.

The Design

Gold is a lustrous and beautiful metal and the design of Golden Eagle Coins ensures none of this beauty is lost but significantly enhance. Being minted in 22-karat gold the design of the coin is inspired by Augustus Saint-Gaudens, the famed American sculptor. The $20 gold coin is considered one of the most beautiful coins ever produced. So these coins offer a fantastic investment and a real physical sense of tangible beauty.

With the uncertainty in the world, it makes a lot of sense having some of your investment portfolio in gold. When you’ve decided to invest in gold ensure you choose a reputable dealer preferably one that is recommended. Get informed by reading investment books and ensure any purchases include certificate of authenticity (COA). Gold’s everlasting scarcity and desirability ensures that it time and time again beats established investments.

Want to know more?

http://www.mygoldeaglecoins.com

Our image of a canny investor might be clad in pinstripe, testosterone- fuelled and a ruthless risk-taker. Yet he is in serious danger of being outperformed by those of a more feminine persuasion.

One of the largest studies of investment activity, carried out at the University of California in 2001, showed that men traded 45% more often than women. Yet their average risk-adjusted returns were 1.4% less. Another large survey by DigitalLook found that women’s portfolios grew by 3% more than the FTSE in the year ended 31st July 2004, while men’s lagged 1% behind.

Since then the evidence for female supremacy in the investment markets has been steadily mounting. Now psychologists can identify the character traits that make up a winning investor. They’re also pinpointing those traits that explain why more men end up counting their losses in the markets.

What are those attributes that put one a cut-above the other? Women’s better investment performance may be down to the simple fact that they are:
More cautiousWomen’s portfolios are more balanced and diverse. They also choose more low risk, less faddy, options.
Less competitiveWomen invest less of their ego in a deal. They’re less motivated to prove their financial prowess to others or to be in it for the thrill.
More consistentWomen have been shown to back a less volatile portfolio than men. They’re also better at tuning out the ‘information’ that others may over-react to and riding out the ups and downs of the markets.
More patientThey engage in less fund hopping, trade less frequently and hold investments for longer. Those that trade most frequently earn the lowest returns, studies by Barber and Odean (2000) and Carhart (1997) have found. This is true of both individuals and mutual funds.
Better researchersAlthough women on the whole are less experienced investors than men, they will research more thoroughly and be less swayed by the herd.

Sure, these aspects of the female psyche also make women more conservative investors than men. And so they may not reap the stratospheric profits (or make the mega losses) that men do. But, by investing in funds that are consistently good over time women’s net returns are higher. And isn’t that what counts in the end?

Of course, many men have what it takes to make them top-notch investors. But their winning traits may not be the customarily masculine ones. The truly top male investors may be more in touch with their feminine side than we’d think.

Apart from a lack of estrogen and fewer handbags, what else accounts for the winner-loser divide? There are three key psychological traits that, when it comes to making the savviest investment decisions, can trip men up every time.

These are:
Attitude to riskMen are less risk averse than women and will back portfolios that are more uncertain. They’re more likely to put all their eggs in one basket instead of opting for a safer, more diverse portfolio. Men’s higher earnings and greater net worth also makes it easier for them to take greater risks than women. A US study by Wang in 1994 also showed that women are more likely to be offered safer options than men, by advisors who expect them to be risk-averse.
OverconfidenceOverconfidence is consistently found in more men than women, research shows. And this is especially true in male-dominated arenas such as finance. They overestimate the returns their investments will bring and the certainty of the return. They also have a misjudged overconfidence in the accuracy of their own knowledge and over-rate their own ability. In a Gallup study, both men and women expected their portfolios to outperform the market but men expected theirs to outperform it by a greater margin.
The herd instinctConstantly monitoring the market can fuel men’s over-activity and cause them to act irrationally. Men are more likely to get drawn into financial follow-my-leader games and information cascades. They also fall foul of being too well informed, instead of tuning out the endless stream of news and financial information and sticking to an annual portfolio review.

Despite women having more of the innate skills that could earn them the best returns, still lamentably few of them are in the game. Male investors outnumber females by eight to one, and a mere 3% of hedge funds are headed by a woman. Simonne Gnessen, who owns Wise Monkey Financial Coaching and has a predominantly female clientele, says women could do with borrowing some of that male over-confidence. “Many women have exactly what it takes to reach dizzy financial heights,” she commented, “the only thing holding them back is knowing that they have it and acting on it.”

Professor Karen Pine is a renowned researcher in Developmental Psychology as well as being a popular women’s writer. Currently she is Professor of Developmental Psychology at the University of Hertfordshire. Professor Pine’s research has been published extensively in international academic journals and presented at conferences worldwide. Women’s issues have always been at the heart of Karen’s interests and her wide-ranging research includes non-verbal communication, money management and body image. She has featured regularly in the media, on television programmes such as Channel 4 News and Richard and Judy and in news media from the Independent in the UK to the Sydney Morning Herald in Australia.

http://www.karenpine.com
http://sheconomics.com

The old saying “History doesn’t always repeat itself, but often rhymes”, is based more on fact than fiction. By studying the US Economic Recession History, you should better understand how current recessions may affect your financial life today.

I focus on recessions simply because they have a dramatic effect on 401k balances and investments in general. During the last recession, which was officially from March of 2001 through November 2001, the major market indexes plummeted. The Nasdaq Index declined over 70% from it’s high within a year surrounding the recession. This index still hasn’t recovered. It is still only half of where it once was.

Could you have avoided this downfall by studying the US Economic Recession History? Maybe, but maybe not. Let’s look at the problem. The National Bureau of Economic Research (NBER) is the official agency that determines when recessions begin and end in history. Since recessions have such a detrimental effect on our investments, wouldn’t it be nice if they would notify us when one is beginning? Yes it would, but they don’t. The Nasdaq Index lost over 43% from its high before the NBER determined we were in our last recession. It took them 9 months after the beginning of the recession to announce it had begun. Is this a fluke? Unfortunately not. The official notification of the beginning of the last 4 recessions came an average of 228 days after they had already begun. This is an 8 month delay.

The way numbers work, if you lose 50% of your portfolio, you must earn 100% just to break even. If you had $100,000 and lost 50% ($50,000), you are left with $50,000. You must double this (100%) in order to break even. This is why it seems to be twice as hard to regain money after losing it. It took the Dow Industrial Index and S&P 500 Index around 6 years to get back to even after the last recession.

Let’s pretend you’ve lost 43% of your portfolio and are determined NOT to lose any more. You sell your stock funds and put your account into the safety of the money market. Your account is now safe for the rest of the recession. Will knowing the US Economic Recession History help you determine when the recession is over? Once the recession is over, you definitely want to move back into stocks so that you don’t miss the next increase in the market. After all, you need to make almost 100% just to break even!

NBER announced the last recession was over on July 17, 2003. Unfortunately they announced it was over in November of 2001! Yes they didn’t determine the last recession was over until nearly 2 years later. Had you had your investments strapped down for the winter winds of recession, you could have missed the excellent recovery period that typically follow recessions. The end of the last 4 recessions were officially announced an average of 522 days (17 months) after they were over.

Studying the US Economic Recession History may be helpful for some, but I don’t find it very helpful in managing investment portfolios. I find that tracking Supply vs. Demand in the investment markets is a much better way to protect assets. When supply begins to outweigh demand, simply change the portfolio to a more conservative stance. This usually happens near the beginning of recessions and you have plenty of time to switch your portfolio to safety. The opposite occurs near the end of recessions. Demand shows back up and you begin to change the portfolio to one of moderate risk.

The upside to recessions is the fact that periods of expansion last about 5 times longer than recessionary periods. There were 10 Recessionary cycles since 1945. The recession side of these cycles lasted on average 10 months. The expansion side lasted on average 57 months. If you can protect your money during the 10 recessionary months you won’t have to spend a lot of the expansion months trying to get back to even. You can instead be exploring new highs for the portfolio.

John M. Norquay
Chief Compliance Officer
PivotPoint Advisors, LLC

Help your 401k through the recession with 401k Plan Facts

The best investment portfolio for 2010 and beyond will hold stocks, bonds, and money market securities. Finding the best investment in each area is not possible or necessary. Coming up with YOUR best investment mix is. Let’s review your investment options.

I’ll keep it simple. If you invest at all you have an investment portfolio, which is simply a list of the investments you own. For example, if you have a 401k plan you probably picked a few different investment options from a list. Most of your choices were likely mutual funds. Even if you knew not what you were doing, you put together your own investment mix, your own portfolio. The question is whether or not this is the best investment mix for you.

If you are like 90% of the investors I’ve known and worked with as a financial planner, you don’t really understand this stuff. That’s why you should be invested in stock funds, bond funds and money market funds vs. individual securities like stocks and bonds. When you own funds professional money managers pick the stocks and bonds etc. for you and a pool of other investors. But you need to pick the appropriate mix of funds.

So, let’s take a look at the securities or funds you might own or be considering, and see if changes might be in order. I say “might own” because most people are not sure what they really hold in their investment portfolio. Sound familiar? Let’s start with your safe investments like bank CDs and money market securities. If you have cash invested in a money market fund, you have money market securities in your portfolio. The bad news is that you are earning very little in your safe investments. The good news is that you have a high degree of safety. Don’t keep all of your money here, but don’t bail out just because interest rates are low, either.

If you are risk adverse don’t be afraid to have 50% (or more if you are retired and older) of your investment mix safely invested. Sooner or later interest rates will go up… which brings us to the next area of investment options you might own. Bonds and bond funds (also called income funds) pay more interest, and billions of dollars flowed into bond funds in 2009 from every-day investors chasing higher interest rates. Check and see if any of your mutual funds fall into this category.

Income funds or bond funds probably treated you OK over the years, but this will change in a hurry when interest rates go up. Interest rates were at highs in the early 1980’s. They were at historical lows in 2009. When rates go up money market funds should be good investments and pay more interest in the form of dividends. Bond funds or income funds will lose money. That’s not a theory. That’s the way bonds work. If bonds or bond funds are a large part of your investment mix, or you are considering long-term bond funds, think twice. The risk is significant. Your best investment here is short-term and intermediate-term quality bond funds.

Now let’s look at the third category of investments you probably own or should own… stocks, commonly in the form of equity funds. These are the investment options that have likely caused you heartburn and acid indigestion over the past several years. There’s more risk here, but greater profit potential as well. The best investment mix for most investors: about 50% in stocks, preferably spread across a VARIETY of equity funds. Conservative folks might want to cut this to 25% or even less, but all investors should be familiar with the variety of equity funds that are available to them.

First, you need a GENERAL DIVERSIFIED domestic (U.S.) equity fund that basically tracks the U.S. stock market’s performance. Then, add a diversified international fund that invests in a broad range of foreign equities. You now have a leg up on most investors who miss opportunity by not investing abroad. You may want to add a small-cap or mid-cap fund that invests in smaller companies, because these funds can outperform in some market environments. Finally, consider non-diversified equity funds that specialize in stock sectors like real estate, natural resources, basic materials and precious metals for a smaller portion of your allocation to stocks.

The best investment portfolio going forward will contain stocks, bonds, and money market securities; but you will need to give your investment mix the attention it deserves. Hold some safe investments, avoid long-term bonds, and diversify your stock holdings. Uncertainty and risk in the investment markets is likely to remain high. When in doubt diversify across the three investment areas and within each of them.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

To learn to invest informed and learn how to invest with confidence most people should break the subject down into two parts: investment basics and investing. By tackling topics or articles in the following order you can learn how to invest money as an informed investor without wasting too much time and effort.

First get a handle on basic financial concepts, terms and investment basics. Every investment in the world can be evaluated based on just a few simple characteristics. Don’t invest money in anything until you know if it fits YOUR needs for such things as safety, liquidity, growth, and income. Only if you invest informed can you avoid the costly mistakes that are caused by picking an investment that’s not right for you.

Then, as a basic investment guide, focus on stocks and bonds because this is where you are most likely to invest money in the future. Once you have a handle on these securities, its time to get familiar with investment markets and how to invest in them. If you don’t understand the stock market, for example, your knowledge of stocks (equities) is of little value in the real world of investing.

Learning all about mutual funds should be your next step and shouldn’t be difficult now that you know stocks and bonds. After all, these securities are where most mutual funds invest money for their investors. And mutual funds are where most investors invest money in stocks and bonds in 401k plans, IRAs and other accounts. There are thousands of funds to choose from but 99% of them fall into 1 of 4 general categories.

You should also get familiar with other investments like money market securities and annuities before you move from the INVESTMENT GUIDE phase of your education to the INVESTING GUIDE segment. In other words, before you can learn to invest informed you’ll need a clear understanding of all of your major investment options and how they compare in terms of their basic investment characteristics. This is not as difficult as it sounds since the universe of investments can be condensed into only 4 different categories or asset classes: cash equivalents (safe, liquid investments), bonds, stocks, and alternative investments.

Investing is the art of putting an investment strategy together and managing your money at a level of risk that’s within your comfort level. Once you understand the investment end of things you need a game plan in the form of a complete investment strategy. Asset allocation is the single most important part of any strategy; and your portfolio asset allocation over time will be the main thing that determines your success or failure as an investor. Concentrate on learning asset allocation: how to invest money (in what proportion) across the 4 asset classes mentioned above.

Now you’ll also want to learn to apply various investing strategies or tools to help offset risk while earning higher than average investment returns. The two important things to understand when you get started in the learning process are the following. Learning how to invest is easier than you think if you take the subject one step at a time in a logical sequence. Second, learning to invest informed is actually a two step process: learn investment basics, and then learn investing.

Don’t get discouraged if you don’t understand something in an investing article you are reading. Back up and search for another article that covers the topic or area that confused you. For example, if you are confused by an article on bond funds it’s probably because you don’t understand bonds in general. Most people don’t. Most people don’t get much out of an adventure novel, either, if they start reading on page 47.

Take fear and anxiety out of investing. Learn to invest informed.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

It’s easy to invest when markets are running smoothly but when they are uncertain your confidence can be sorely tested. More uncertainty in investment markets means more risk and that means you will need to review your investment strategy.

Start with the basics. Focus on your goals and objectives. Write down your goals and the time frame for achieving them. If you have long term investment goals, remind yourself not to get too distracted with short term changes in the market. Your strategy may need fine tuning from time to time but if it has been well thought out, you shouldn’t need to make major changes. Reversing your strategy or pulling out of investing completely will cause you to lose value and lose time – both key ingredients for achieving your goals.

Review your attitude towards risk and reassess whether your investment strategy is a good fit for your risk tolerance. When things are going well in investment markets it is easy to take on more risk than you should. When markets become more volatile or uncertain you need to carefully assess how much risk you are taking and whether the returns reflect the risks. Find the right balance between risk and return so that you can achieve your goals while taking an acceptable level of risk.

Stay diversified. Markets can change quickly, and moving all your investments into one asset class might work in the short term, but it means you are taking on more risk by having all your eggs in one basket. When prices drop there are bargains to be had and astute investors will invest more at times when there is a market sell-off. If you understand what you are investing in, and have a good feeling for whether the return reflects the risk involved, you will make good decisions. Don’t sell in a panic. That way, you will crystallise any paper losses. Selling up and putting all your money into very safe investments will lower your return, possibly making your goals harder to achieve.

Evaluate all the options you have. This might mean getting more information from an expert who you trust. Don’t get caught up in sophisticated investments unless you understand how they work, what the risks are, how you will make money out of them, and in what time frame. Make sure that any advice you get is from someone with a balanced or independent point of view who can point out the downsides as well as the advantages of different investment options. Don’t be swayed by glossy brochures and slick advertising from companies tempting you to invest money with them. Stick to the hard facts such as you would find in an annual report or investment statement and consider the trustworthiness and track record of the people involved.

Confident investors have a long term plan that they stick to, they do their research, they aren’t swayed by emotions such as fear or greed, and they are successful at building wealth.

Liz Koh is no ordinary financial planner. After a successful career in management spanning more than twenty years, Liz set up her own financial planning company – Moneymax – in 1999. Since then, her mission has been not only to help people manage their money and increase their wealth but also to help people enjoy their lives – to the max! Her list of clients continues to grow through word of mouth and she is a regular contributor to several top newspapers, magazines and websites. Liz is the author of the best selling book – Your Money Personality: Unlock the Secret to a Rich and Happy Life, Awa Press, 2008, available from http://www.awapress.com

For Liz’s best tips for financial security, visit her website http://www.moneymaxcoach.com to receive your free 8-part eCourse on “8 Steps to Financial Freedom”.