Home' Air Force News : October 13th 2011 Contents 21
October 13, 2011
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IF YOU are an investor, don't just
invest and forget.
Keep your eyes open, be pre-
pared to ask questions and watch
out for warning signs that tell you
something may be going wrong.
Investment markets can be volatile,
so review your plans regularly.
Savvy investors take the time to
understand the basic principles of
investing, then develop and stick to
their investment plan based on the
timeframe of each investment goal.
Even when market and economic
conditions are rapidly changing it is
vital that you keep a cool head as a
knee-jerk reaction can often make
When market conditions change,
it is important to revisit your invest-
ments to assess whether they still fit
your goals and risk tolerance.
This will help clarify your position
and will inform your next steps.
Make decisions based on your
long-term investment goals and what
you think will happen in the future.
Do not make a decision based on
what has happened in the past -- for
example: "my investment has gone
down 20 per cent."
If your investments are still on
track to meet your goals, then you will
need a good reason to change.
However, if your investments are
no longer on track, you have a tough
Investors need a cool
head and keen eye, says
Australian Securities and
chairman Greg Medcraft.
Some typical warning signs that your investment may be head-
ing downhill include:
Published statements: Sometimes ASIC and the Australian
Securities Exchange (ASX) require issuers of investment
products to publish statements clarifying or correcting
information given to investors. The investment may still be
suitable, but these warnings may signal that the investment
involves more risk than you want to take. The problem may
have been a genuine oversight but you need to be sure.
Accounting problems: Mistakes, delays, audit qualifications
and controversy over accounts could be warning signs.
Accounting rules can be complex and genuine errors or dif-
ferences of view do occur. However, repeated issues may
indicate deep-seated problems.
Management problems: Director and senior management
in-fighting, resignations, breaches of the law or unethical con-
duct are sometimes warning signs. Changes in management
may be necessary, but could take attention away from respon-
sibilities to investors.
Repeated over-promising and under-delivery: While even the
best managers make mistakes, ongoing disappointing results,
lack of communication and falling service standards may indi-
cate that something is seriously wrong.
Should you change investments
(and sell when prices are low) or hope
that your investments will go up in
It's important to think carefully
about your next step.
If you are making your own buy-
and-sell decisions, you may need to
review and rebalance the investment
mix to make sure it still matches your
strategy and attitude to risk.
If you are using a fund manager or
financial adviser, discuss your options
If you have used a margin loan to
pay for your investments, you should
check your loan account regularly
because the value of your investment
can change very quickly.
As your investment is used to
secure the loan, you should ensure
that you can sell the investment and
repay the loan if market circumstanc-
When monitoring your invest-
ments, keep your goals and risk toler-
ance in mind.
If your goals change, you may
have to re-jig your strategies too.
A change in your employment
status or health may alter the risks you
are prepared to take when investing.
However, there's no guaranteed
method to spot losses in advance.
Even the most experienced investors
Record keeping is an essential part
You need records for accounting
and tax purposes and to assess wheth-
er you need to make changes to your
The world changes and so do you.
That's why successful investors
review their plans regularly.
The rule of thumb is to revisit your
investment plan at least once a year.
For a more information on investing, go
HEED THE WARNING BELLS
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