Invest, don't invest or wait?

All three of these are investment decisions. By waiting or not investing you are choosing to keep your money somewhere. Is that place keeping pace with inflation? If not, your investment decision means you could be effectively losing money without realising it. There is no easy way out, investment choices are being made even when you are standing still.

Are you apprehensive about investing in shares when the market is volatile? Are you worried about the right time to buy or sell your investments?

Markets have been increasingly volatile. Where should you turn in uncertain times? Where is a good home for your money? Even deposit returns are at their lowest level since the early 1960s.

Many want to enjoy better returns but still protect themselves from the most damaging market lows. Something designed to keep cool in a crisis!

Getting investors to come to terms with lower returns begins with investment managers and advisers powerfully communicating why. Sadly, sales and marketing directors have a habit of massaging the message to suit their short-term goals. And that's the point. Anyone can make a solid case for investing in bad times as well as good. The acid test is: do you know the investment manager/adviser and do you trust their judgement? If you cannot say yes to these questions then you're dealing on blind faith. Many of you know how misplaced this can be.

Always ensure that anyone giving you investment advice truly has your interests in mind. You can test this by seeing how much they ask you about your views like risk tolerance, your financial goals, your overall budget and expenditure.

Don't be afraid to keep asking questions if it's not completely clear. The investment industry can be full of unfamiliar jargon but all of it is explainable so that it can be understood. The best test is if you can explain it back to your adviser in your own words. As a quick test to yourself do you know what pension funds you are invested in and why?

Take time to understand your tolerance to risk. On a scale of one to ten if one is straight cash and ten is "investing" everything at a casino, where would you rate yourself? Remember that if you choose, say five, this means you are willing to accept your investments going down. Really take the time to understand if you can accept this or not. It's often beneficial to keep a good portion of your investment in a safe place whilst taking on some speculation with a smaller portion.

Don't just invest in something because it performed well in the past. Ensure the strategy going forward makes sense too. Also understand how your investments will fair in different market conditions i.e. if interest rates rise or fall, if the stock market rises or falls.

Make sure all fees and charges are fully explained and acceptable to you. When you see performance figures establish whether this performance is before or after charges have been deducted. How easily and quickly can you access your money if you need to and are there any penalties involved?

The key thing to remember in uncertain times is to keep up the savings discipline. If you wait to decide where to invest, other spending temptations creep in!

@EDITRULE:

Sue Wyatt, ACII is general manager of LOM Asset Management Ltd. Its website is www.lomam.com