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Personal Investment: Successful Investing 101

Personal investment

Personal investment is now essential for your well-being. Changing times make everyone an investor. Successful investing for medium-term profit, or for long-term retirement income, are both necessary. Failing to learn about, understand and undertake a personal investment strategy will seriously damage your wealth.

But why do you have to “learn” about investing at all?

Obviously you want “to make more money!”. But there is a much more pressing reason: the economic climate makes you an investor whether you like it or not.

Historical aspects of personal investment.

Over recent years it has become much more important to learn about investing and investments. Historically, from a personal investment point of view, our lives were much simpler. You could get by – and maybe even prosper – just by understanding the basics.

Twenties on White
Photo by Darren Hester
You had the money in your pocket, your bank account, or savings & loan account (UK building society account). Perhaps you had a few investments: an endowment policy, life insurance backed annuities – such sophistication!

No complicated decisions! Prudence was the name of the game. Just live within your means and safeguard your savings.

But then, very quickly, a financial revolution took place.

Inflationary pressures of the 1970′s and early 1980′s eroded the wealth of many. This was especially the case for those individuals on fixed incomes from savings and pensions. Perversely, and simultaneously, fortunes were made by those fortunate enough to be in beneficial investments, such as property and precious metals.

A more profound change followed. The Financial Services industry was born. Money, and all the places you could “invest”, were opened up to aggressive advertising, marketed, and sold as “packaged products”. The “Big Bang” in financial services had arrived.

The ‘Big Bang’ in financial services.

Overnight even simple everyday decisions became bewildering.

How does one choose between the confusing array of accounts offered by banks and building societies?

And how can you be sure that your money is safe?

The Big Bang
Photo by ToniVC
Innumerable offers were available for mortgages, pension plans, mutual fund (UK unit trust), exchange traded fund (ETF – UK investment trust), UK business enterprise schemes, and UK personal equity plans, now ISA’s (individual savings account’s).

And in addition: schemes offering “products” for time-shares, tax planning, school fees, inheritance tax, offshore investment accounts and insurance.

What about the Stock Markets? Was this a good place to invest?

Well the booming Eighties turned into the Nervous Nineties, and more recent downturns have shaken confidence. You may well wonder whether these events have altered the Stock Market’s forever. Well the answer to that is that they have not.

Did program trading, insider trading, the collapse of banks, or the buccaneering dealings of financiers, stack the odds against individual investors?

Well, no they did not.

Does investor protection help successful personal investing?

In fact, they only led to much more stringent investor protection, although this is still far from perfect. Governments have tried, at various times, to curtail the excesses and regulate the markets. This, until recently, has been undertaken by the Government of individual countries, but the banking crisis of the last decade means that a more global approach is necessary. Your bank account funds are somewhat protected, but for any other investment, you are hung out to dry. Your choice, your problem!

Emerging economies

The boom of the Russian (and Russian satellite countries) economy, and the Chinese (and other Asian countries) market economy, alongside the creation of the ever-expanding European Union, held, and some say still hold, some uncertainties for the US and Britain’s economy and monetary system.


Photo by elycefeliz
It has had an impact, not just on the US and British economies, but on the world economy. The US economy has historically had an effect on us all. When the US economy is booming we all prosper, when it is in the doldrums the worlds economic prosperity has followed suit. But that is changing: emerging economies are no longer as reliant on the US economy, in fact it is the US economy that is becoming more reliant on emerging markets, to maintain the illusion of wealth.

What these events show is that the pace of change is always accelerating. The result is more risk for the unwary and uninformed, but increased opportunity for the knowledgeable. The upside is that the internet arrived, and with it the opportunity for everybody to become knowledgeable.

I say “opportunity” for you must take advantage of the information that is presented – that is, if it has been made available!

How does this knowledge give you the ‘Ground Rules for Successful Investing’?

Today’s rapid pace of change creates a new world of investing. The result: more choices and more chances for the informed investor to profit!

What is the key to success?

Knowledge is the key to success!

It is knowing how this new world really works, and knowing the “tricks of the trade”, that leads to successful investment.

But where can one get this knowledge?

Tai Shan, National Zoo's Panda Cub at 1 year old
Photo by dbking
You were probably not taught investing and money management at school, college or university. Newspapers and magazines give fragmentary advice and information. They don’t give you the whole picture, starting with the basics, and moving logically to the more advanced techniques. And how objective is that information, when much of the income for these media is from advertising revenue, generated from campaigns run by the financial institutions?

The Internet is no better, as most of the information about investment, and business opportunities, is created by those with a vested interest.

Independent advice

What is required is an independent look at investment opportunities. Personal investment success is driven by knowledge and understanding, and knowing where to get the best advice. I do not give advice, but I can present the alternative investment opportunities, without prejudice. The facts, without the bullshit, is what is required. It is then up to you to decide whether to take advantage of those investment opportunities

I hope, from the information contained in the series of articles I present, that you will be able to develop your own strategy for personal investment success.

 

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