I have often wondered why some people are prepared to invest their money without even a basic understanding of what it really means to invest.
So often, investment advisers are blamed for not calling their clients to say when they should buy or sell. Sometimes investors, not knowing what they should do, take comfort in saying they will call their adviser to ask what to do.
I have often suggested that people not yet fully clear on how to invest should invest in unit trusts or mutual funds and benefit from the experience of the professionals and the pooling of funds.
Alternatively, they may opt to engage the services of portfolio management companies, which manage funds for a fee and which accommodate their clients with several arrangements such as accepting funds at regular intervals and not necessarily in large amounts.
What is required to a great extent is the willingness of investors to allow their funds to remain invested for a long time. This does not necessarily mean that funds will not be withdrawn because this may be necessary to fund particular goals.
But what if investors opt not to take any of these options? It seems to me that such investors should make some effort to educate themselves about investing: know about the instruments, how to evaluate them, and when and for what purpose to acquire them.
How do prospective investors, for example, approach making an investment in an initial public offering or an additional public offering? The prospectuses for these public offerings include a clause advising prospective investors to read the entire prospectus carefully before making an investment decision – with very good reason.
Leave A Comment