People trying to play catch up due to losses

An article in the Sydney Morning Herald caught my attention this week (Softly, softly catchee chance of slow recovery from doom). It discussed how many of those who lost money in the stock market during the GFC were now impatiently trying to reclaim their lost financial position through high risk investments.

This reminded me of the increasing number of people I meet, particularly since the GFC, who are trying to play catch-up. Many have been burnt by the stock market however the majority have either ignored the idea of saving or have simply taken the ‘she’ll be right’ attitude to money for too long. Instead of setting a measured amount of savings aside each month for the last 20 years, they now find themselves in their late forties or early fifties and realise that they have 10 – 15 years left to achieve what they want financially in the time that really takes 20 – 30 years.

So what do they do? They start to search for ways to play catch up. They believe the spruikers spiel about how to buy property with no money down and attend ‘get rich quick’ seminars on stock market investing and property investing. Shortly after they start making foolish mistakes. In short, they put themselves at the greatest risk of losing what they have by chasing lofty and often very unrealistic returns.

I am not saying that investments that promise 10% or greater returns are not available and don’t happen as they do and I have achieved them myself on many occasions. However these investments by and large are medium to high risk where you should only use a small amount of your net worth each time and it must be money that you can afford to lose if the gamble doesn’t pay off. Anyone who is promising you above average returns and playing down the degree of risk is someone whose advice should be treated with extreme caution.

It’s never too early to start putting money aside for the future and for those who have left their run a little late, now is the time for a clear head and sensible decisions to make the best of what you do have to work with rather than gamble with it. If you don’t have a financial advisor and would like an introduction to one who will put your interest ahead of their own then just shoot me an email by clicking here and I will put you in touch with someone you can trust to give you unbiased advice.