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Q&A - Cash to shares?

When it became obvious that there would be a change of Government at the last Federal Election I transferred my super into the cash option and have thus luckily missed all the big losses.

I reach 65 in about three years and wonder if it is worth looking at moving from cash into a share portfolio. I worry greatly about our current Government – I remember all the other times they have been in power and I guess I am nervous about taking any risk.

Investing is about determining your own preference for taking a risk to try and get the best return you can on your hard-earned funds. This is a personal decision for every investor, some people do not want to take any risk and therefore just keep their money in cash, while others invest in their own business. You made your decision to sell your shares and invest in cash and this decision has served you well.

However, you are now faced with another tough decision and that is timing your next investment. As you have missed a lot of the falls, you could probably take the view that you can wait for the markets to look solid before investing again. Your problem is that if you wait too long you will have missed most of the easy money, in fact things have moved so quickly this may already be the case.

If you are really that concerned about the Labor Government you can always invest internationally. In fact, a lot of people would argue that our share market is influenced as much, if not more, by international markets and events than the government of the day. Also, remember that in our society if the government does not perform they can be voted out at the end of their three-year term.

So, if you are nervous about taking any risk then you have probably answered your own question, in that for you it is not the right time to invest and will no be right for you until you are confident about taking some investment risk.

However, I ask you to consider an investment rule I have learnt from Warren Buffet that goes as follows:

Be fearful when others are greedy, and be greedy when others are fearful.

If you apply this rule then you would have already invested or be about to. Ultimately, the decision is yours but remember despite what Buffet says the first rule of investing is that the bigger the risk the greater the return (or loss – Buffet can afford more losses than us ordinary folk). So when you are ready may be some small well thought out investments that are not risking the shirt on your back are the place to start.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.


Published on: Friday, August 14, 2009

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