Questions investors should ask
Dec 30 2008 by Colin Smith, The Journal
HOW safe is 'safe'? The difficulties faced by certain banks, along with severe volatility in almost all asset classes, has shaken investor confidence and left question marks over just where to invest capital.
Virtually all difficulties have been the result of the worrying situation that has been labelled the global credit crunch.
One thing this has taught investors is that little in the world of investment is guaranteed and the degree of risk involved in many investments is much greater than most investors imagined.
The credit crunch has also uncovered some spectacular instances of investment fraud.
Some key points to remember when making investments are:
Before making any investment, the investor should satisfy themselves that they are doing business with a financially sound institution and are fully aware of the associated risks
Most investments in the UK are regulated by the Financial Services Authority (FSA). The FSA also authorises and regulates investment advisers in the UK
When taking advice it is essential to ensure that the investment adviser is regulated by the FSA
Obtaining advice from an Independent Financial Adviser (IFA) maximises your investment opportunities and chances of obtaining impartial advice.
In relation to deposit accounts, the Financial Services Compensation Scheme provides a maximum of £50,000 protection per individual per institution for investors depositing funds in UK-based banks and building societies.
This protection is available for each account that an investor holds.
It can therefore be a sensible idea to spread large cash holdings between a number of accounts with a number of institutions.
With the volatility that has been experienced recently, the concept of diversification is important.
There are an ever increasing set of asset classes available for private investors to choose from.
For further information regarding diversification, alternative assets and how equity exposure can be achieved cost effectively using collective investments, contact Colin Smith at colin.smith@dickinson-dees.com or on (0191) 230-8551.
