Local investors in Bermuda have spent two years looking back, is it time now to look forward? Do you feel up to comparing where you then compared to where you are now, physically, mentally, and investmentally?

Do you remember how you felt as the market fell apart? Did you sell out, thinking it would never recover?

Any regrets about not waiting it out?

Some of the most experienced investors crumbled first this time around the meltdown, yet some of the more timid opted to conquer their stress and just wait it out. Were they rewarded for their patience? Probably, as more and more of the investment world climbs back up to par and beyond, maybe it was the right thing for them to do.

Flashback to April of 2000, that market downturn lasted three years. Did you go through the same emotional cycle then as well? What did you promise yourself that you would definitely do differently, once your investments recovered? Did you carry out those good intentions, No? Why do we have such short memories when it comes to negative issues?

I ask because if some of the pundits are to be believed, the sub-prime market meltdown is in recovery phase now, although Jim Cramer thinks we may be in the middle of the W peak.

In times of uncertainty, investors have a tremendous tendency to hoard money; the theory being, better sweet cash than sour investments. They are reluctant to commit to any investment, preferring to take the wait and see attitude. Only the very brave, the astute, and some of the reckless will jump back in before there is a perceived demonstration of upward market value activity.

Investors have learned a great deal again about themselves, the behaviour of the markets and those who manage them. Investors know quite clearly, what they did not like about this market downturn:

• They don't like complex derivative products that no one understands, except perhaps those who created them and those that made astronomical amounts of money from selling them on.

• They are appalled at the opaqueness of some investments

• They are frustrated about their inability to obtain straight answers about the make up of some funds

• They truly understand this time around that the word guaranteed almost never means what it says

• They know that it is very, very hard to sort a real guarantee from a fake guarantee.

• They have been more or less unhappy with their advisors to the degree that they received, or did not receive, communication.

• They've decided that this time they are not taking on any risk in the future, well, at least, not until the market goes back up again.

• They want explanations from their advisors to justify the fees charged to manage funds that lost money for two years.

• Deep down inside, they know that they had all the same feelings the last time around and the time before that and the time before that.

• This time, they resolve they won't take the bait, until those interest rates stay low, low, low

So, what should you do now?

Again and again, the refrain is keep it simple, in your investments, in your career, in your personal life. We have cluttered our minds beyond comprehension in this switched on age: texting to everyone, interacting physically with no one. Twittering until you drop brings no personal satisfaction or serenity whatsoever, and may contribute to an evolution of millions of attention deficit individuals.

Whatever happened to taking the time to dream, to think big thoughts, and calmly plan for your future?

Keeping it simple and risk averse with your investments means only investing in things that you understand. This sounds easier than it appears on the surface, but if this is what you want, be prepared to do some digging. There has never been anything wrong with buying a simple inexpensive index fund, or an exchange traded fund, coupled with a laddered series of sovereign bonds. You can save a small portion of your allocation for something a bit more diverse.

In the next few months, we will revisit investments: their structure, their suitability, their cost, how an advisor can work for or against your risk tolerance - knowing that each of you bears a responsibility to the dialogue, DIY, doing it yourself, or finding a qualified investment advisor among the alphabet soup of letters after names.

Investment series - future articles

The composition of a fund: they've been touted forever as the best way to diversify a portfolio. That may be so, but since Madoff everyone feels that they need to know more about the makeup of these funds. We explore this investment structure, and questions you should be asking, such as: who is responsible for due diligence; does the fund use leverage, or short selling, or derivatives. What are your rights to your capital when markets turn bad?

Advisor Miser or Minder. It is inevitable in bad markets that plenty of blame gets spread around. Clients become disillusioned with their advisors while the areas of individual responsibility between client and advisor become ever more blurred. In an investment agreement, and you need one, who is responsible for what.

The Gold standard in investment world. Does your advisor have the credentials and experience to truly advise you on an independent conflict-free basis? What are the best attributes you should be looking for? Be careful of the words consultant, certificate, license, courses, qualified and so on.

What do they really mean? The best advisors have earned the right to use global trademarked initials after their names. Many are similar, but few are real.

Investment products: An annuity is only as good as the insurer backing it with a promise to pay. Are they really guaranteed? Will that firm be around in twenty years? Risk management is the product that insurance companies are supposed to excel at. How can the average person feel comfortable that they have done their homework on the balance sheet strength of the insurance company whose products they own?

Martha Harris Myron, CPA, CFP(US) TEP(UK) JP (Bermuda) is a Certified Financial Planner™, at Patterson Partners Ltd. She provides independent fee-only cross-border tax, estate, investment, and strategic planning services for Bermuda residents with US cross-border and multi-national connections, internationally mobile people and US citizens living abroad. For more information, contact mmyron@patterson-partners.com or phone 296-3528.