30 September 2012

A useful checklist

10 Rules for Dealing with Financial Advisers (The Big Picture)

26 September 2012

Financial TV - who benefits?

Amid the permanent cascade of opinions that are pumped out by financial news stations such as CNBC and Bloomberg one easily forgets that the information peddled should be consumed with caution. Potential investors may be confused by the hundreds of often conflicting recommendations that are broadcast every week but it is still up to them to make the ultimate decision about what to buy and to sell. But one group of winners is certain: the showmasters! A long-standing news anchor at CNBC, Joe Kernen, for example is reputed to be paid an annual salary of US$ 2 million, not bad for a few hours chatter every morning.

18 September 2012

Should you go for Performance of Glitz?

The answer should be clear to you. No investor should choose a financial advisor on any other basis than performance and cost. Posh offices, a gilded history or an invitation to the next sports or culture function should be considered only at the very end of a selection process. See 'How Private Banks Are Luring the Super-Rich' (CNBC) to better avoid the traps that marketing professionals may set up for the unwary.

9 September 2012

EU Banking 'Union' threatens your Savings

The proposed EU Banking 'Union' which would centralise the regulation and supervision of banks in the EU (or at the very least in the member states of the Euro zone) would be a threat to the savers in the countries with more stable financial systems. The guarantee of banking deposits would also be administered on a centralised basis. This could lead to the situation were the savings of citizens in, say, Germany or Austria, are used to bail out savers in banks in Spain or Italy.

7 September 2012

Diamonds - an Investor's best friend?

Just finished watching a clip on one of the major financial news channels. They discussed the benefits of investing in diamonds. At a time when the tax levels in all major industrial nations approach confiscatory levels and more of the same might be in the cards (tax on all cash holdings and bank deposits in the shape of 'negative interest' rates, - watch this space!) the portability and durability of the gems might appear to be a major advantage. But - as always - the devil is in the detail. The promoter who was interviewed on the programme correctly pointed out that there are innumerable categories of diamonds and that the (wholesale) pricing of the stones is only transparent for professionals active in the diamond trade. Retail customers and investors have no option but to use highstreet shops that charge high mark-ups. This will leave the investor out of pocket if ever he wants to sell his holdings. In addition to the loss due to this 'spread' he will also be exposed to the vagaries of a volatile market which could add to any potential losses. Guarantees that are offered attached to various 'investment schemes' should be taken with a (very large) pinch of salt, or better, ignored completely. It is usually less than clear who is ultimately backing these guarantees and what the financial standing of the guarantor is (or under what jurisdiction the guarantee can be called upon).

5 September 2012

Warning Signs of bad Financial Advisor

A useful summary of warning signs is given by Suze Orman (CNBC)
  • The advisor rushes you into making decisions
  • No clear information on costs and fees is provided
  • Your investments are not sufficiently diversified
  • The advisor wants to exclude your partner(s) from meetings
  • Your requirements and personal circumstances are not discussed
  • Your questions or concerns are not properly answered
  • Statements are not informative or do not arrive regularly
  • You receive no regular quarterly and annual reports
  • The advisor wants to have direct access to your money and account
  • You are not kept informed about important developments
An interesting article on the same subject:

Is Your Money Really Safe With a Financial Adviser?