Advice the best way to avoid investment errors: AUI

David Bryant

Seeking investment advice from professional financial planners is the most effective means to minimise investment errors stemming from a lack of understanding of the risks involved such as timing risk and asset class risk, according to the head of a leading financial services firm.

Australian Unity Investments general manager David Bryant said: “I believe that anyone investing without advice is more likely to make mistakes such as taking the wrong level of risk, buying or selling for the wrong reasons, or investing in inappropriate asset classes for them.”

“A good investment strategy should be structured to each individual and their tolerance for risk, and the risk managed accordingly. It should also take into account their particular investment needs and aims,” he added.

In particular Bryant thinks consumers should be alerted to the dangers of making impulsive investment decisions such as selling off stock the minute there is a downturn in the market index.

“Another aspect of equities markets that investors need to understand is that because the index fell, or rose, not all shares performed the same way,” he said.

Bryant feels a lot of investors end up sacrificing good returns because they sell their shares at the first sign of a price fall without waiting for the same stocks’ resurgence just a few days later.

Investors’ preoccupation with yield over capital growth was another area he expressed concern about.

Bryant highlighted the people’s attitude toward property as a good example of this, a situation where individuals, especially retirees, are tending to only look at income yield as a justification for inclusion in their portfolio.

“With even longer life expectancy predicted for Australians, asset growth is a key requirement for most investors and even retirees need to have a sensible balance between income and growth, which makes property particularly attractive,” he concluded.