The Reserve Bank has published online a 64-page booklet written by Mary called “Upside, downside – a guide to risk for savers and investors”. This booklet was updated in April 2017.
You can read or download the booklet from the Reserve Bank’s website by clicking here (PDF, 1.6 MB)
Contents of “Upside, Downside – a guide to risk for savers and investors”
First, some important points:
- The one high-return, low-risk ‘investment’
- Risk is not a dirty word
Risky behaviour:
- Investing in something you don’t fully understand
- Investing in companies that get into trouble
- Overdoing borrowing
- Investing in too few different types of assets
- Failing to diversify within each type of asset
- Failing to diversify over time
- Putting short-term money in volatile investments
- Buying investments that are hard – or expensive – to get out of
- Expecting past performance to continue
- Listening to old-timers
- Forgetting about inflation
- Taking foreign exchange risk – or not taking it when you should
- Responding to ads or offers made in phone calls, seminars or courses
- Being overconfident about your ability to trade investments or time markets
- Taking on more volatility than you can cope with
- Letting your emotions rule your investment decisions
- Taking on more work or worry than expected
- Counting on dividend income
- Paying too much in fees and other expenses
- Being tax-driven
Conclusion:
- Putting it all together – don’t be put off