Posted By Mimenta on February 24, 2017
Back in 2010, I had a well paid job and decided to look at investing some money. I engaged the services of financial advisers. After all they know best right?
I had an interview where they asked me where I wanted to be in 5 years time and where I was now. Two weeks later I received a shiny folder with a professional looking plan. A month later I received my investment statement and their fee.
Unfortunately, coming from an I.T. Background, I recognized it was just a classy Word document with my answers inserted into the appropriate slots and a few pivot tables and charts. There was no advice and nothing I hadn’t already thought of. I heard of a fund looking for investment and a couple of start ups and called my financial adviser, only to find the one I spoke to had left and the replacement was away on leave for a week. When I finally spoke to him, he had no idea about the fund and suggested I Google the start-ups. It soon became obvious from his responses, he wasn’t any wiser than I was. After several similar calls I started to wonder what was I paying for?
Along the way I received emails from them about new shareholdings but they came after the emails from the ASX about the same offers and frankly my shares were doing better anyway. With the Global Financial Crisis and China’s economic misinformation, I felt the share market was not the best place to invest in, anyway. Time has proven me right on that score.
The clincher was their next statement with a $500 fee for … well, nothing. I had a broker for my shares, I was depositing money into a managed fund (and my finance advisers were not the managers), so what was the $500 fee really for?
The business I worked for went bust and my income plummeted, so I terminated the finance adviser’s services. My investments continued to compound without new contributions but my superannuation shrunk as the investment funds were used to pay for the insurance cover, my adviser had recommended I increase. In hindsight the only investments that had withstood this set back and were still earning, were those I had invested myself. I decided, in future if it was going to be, it was up to me.
So to cover my backside – please note I am not a finance adviser, nor do I aspire to be one. Other than experience, I have no formal qualifications or registrations etc. in the field. I’m simply describing what happened to me personally, so others can avoid the mistakes I made.
I’m not saying Finance Advisers are fake or con artists but I have doubts that they can offer value to small investors who do not have large lump sums of money to invest, those average wage earners who can only spare a little each pay. I believe, like me, you’d do better to do a little research yourself and save the fees – invest them instead.
Try searching for topics like alternative investments, investing small amounts, low cost investing, investing without a lump sum, etc., like I did. I discovered “investing in P2P lending”. These are loans sourced to borrowers outside of banks. Look for organisations that credit check their customers and have a collections policy for defaulters. They will often accept small deposits. Mine accepts any amount and deposits it into an account. When you have $25.00 you can invest in a share of a loan. There are a lot of unique advantages of this type of investing we’ll look at in the next installment.