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A risky investment is an investment that is inappropriate for your objective and time period.

All this hogwash about conservative or assertive investors and moderate or aggressive investors is bullshit.

There is no such thing as a conservative investor or an aggressive investor. Have you even seen an aggressive investor happy about losing all his money or a conservative investor celebrating insufficient capital for his retirement?

Warren Buffet says a risky investment is when you do not know what you are doing.

The problem with Risk Profiles

Risk profiles are a waste of paper and are causing serious damage to the general public. All this risk profile nonsense was created by the industry in order to sell more product.

Every Monday, the sales team of financial services companies meet in order to discuss sales. How are we going to sell more product? People are scared to invest. Never mind that we haven’t educated people at school about money and that we still do shit when it comes to financial education, we need to sell a product.

How do we make people feel safe so they buy our product so we can make our fees? We make them feel good by asking them random questions and then based on their answers, we put them into little boxes and then sell them products for each little box.

“Mr Smith, based on our risk profile, you are an aggressive investor and guess what? We have the perfect product just for you.” “Miss Makings, you are a conservative investor and we have our conservative product which is a perfect match.”

Risk profiles are a sales tool which lead to a life of misery and suffering for millions of investors who realise far too late in life that they will be burden to their kids and that they will outlive their capital.

Investing in the Bank is risky

Money in the bank is risky. Why? Because, if we all had to go to the bank today and ask for our money, they don’t have our money. It’s called a bank run. That’s why banks in Greece had to close last year. Cash loses value over time. Cash is safe over the short term but is the worst performing asset class over the long term.

Governments and central banks had to bail out banks! But money in the bank is safe??

There is no such thing as a guaranteed product. If money in the bank is not guaranteed, then how can a product be guaranteed? The US government has trillions of Dollars in debt and the financial system collapsed but we have guaranteed products??

There are three main objectives when investing. One is capital growth. Two is income. The third objective is parking money for the short term or emergency funds.

If you want capital growth, invest in property and shares but invest for the appropriate time period. But remember to do your research and invest in quality at attractive prices.

Your time period is critical. If your time period is less than five years, then you are not investing.

Do not invest in the property market or stock market for less than 5 years. When I started in the investment industry, 30 years was long term. Now 6 months is long term and we focus on short-term results at our long term cost.

How to make sure your investment isn’t risky

Establish what your objective is? Do you want your money to grow or do you need income, or, do you just want to put your money away for a short time period?

What is your time horizon? If you want to make money over less than 5 years, then realise that you are not really investing. Realise that when you invest in shares and property that they are not short-term investments and that they will be volatile, but, over the long term shares and property are king!

Invest in a portfolio or fund which is appropriate for your objective and time period. Far too many innocent people have smooth bonus portfolios or exposure to cash when their objective is long-term capital growth. The investment industry is setting up millions of people for failure and disaster.

Large financial services companies are lying to the public. “Trust us” they say! Lies! If they were truly long term investors they would not be sitting on cash. Cash is the worst performing asset class over time.

Risk profiles are a means for the industry to sell more product and earn fees. Risk profiles have not worked, as less than 10% – and probably far less than that – of people cannot retire comfortably.

Pensioners are not living the golden years. They are lonely, depressed and suicidal. But the financial services keep up with this charade as it helps to sell product and earn fees.

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