The Wise Investor
"While some people abstain from active investment, other
people have different approaches.
One major trend in the modern world is the trend towards
Everything is a product. Ideas, machinery, political
campaigns and insurance policies are all known as products.
They are wrapped up in a neat little bundle, given a name
and a price, and marketed as a product.
Many investments are marketed in this way, especially
investments from large institutions like banks and insurance
Some people take a consumer's approach to investment.
They shop around for investments as they would shop for a
lounge suite or a car.
Again, Kate, this approach is rarely successful. The
consumer of investment products generally makes several
important mistakes. First, they rarely have a long-term
strategy, which they continually monitor and update.
The purchase of an investment product is treated like the
purchase of new furniture; once the decision is made and
the product is bought, no further thought needs to be given to
Consumers are often misled by marketing pitches, and
rarely examine the true nature of the investment in critical
detail. In fact, some products come with such limited
information, that it actually impossible to fully understand
how they work and what they really are.
These products should be avoided on principle. Never,
Kate, invest in something you don't fully understand.
Although some packaged investment products are useful
as part of a total portfolio of investments, they are no
substitute for the investor managing and monitoring their
own strategy as the years go by."
Kate was quiet, almost sullen. She had, she realised,
made almost every mistake in the book. She hoped John
would get to the positive steps soon.