With European debt problems, Libyan intervention, earthquakes, tsunamis and potential meltdown, you might think that the expected growth of the world economy will be trashed. However, this is unlikely to have a significant long term impact with the general consensus from most economists that global growth will be over 4% for this year. This is actually above the long term average.

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A recent report by KPMG econ tech found that people who received quality advice had the potential to improve the outcomes as a result of both an appropriate asset allocation and also improved 'savings behaviour'

After analysis adjustments such as wealth, employment, salary etc, the improvement to the outcome per year was approximately $1590 (after costs). For a 30 year old, this was an additional $91,000 by retirement. Some other tangible benefits were:
 
- peace of mind
- greater control of finances
- improving the prospect of a more comfortable retirement
- creating and aiding the ability to save
- help avoid bad investments
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Helping avoid bad investments is actually an interesting one. Significant value is added by preventing a catastrophic loss.

Yes, additional savings can be made by understanding the opportunity cost. Tax savings can be made by strategic planning. Proper asset allocation can balance the best expected return with a minimum level of risk. But sometimes there is a huge additional risk of an underlying investment without the appropriate level of potential gain and without the client realising it (double whammy).

 If the advice is coming from Uncle Arthur, hot tips from a cabby, special software or a cold call, always remember that in the optimum 'efficient' portfolio (which is as good as it gets) RISK = RETURN.
 
Unfortunately, without sound advice, it is really easy to add risk without the appropriate return.
 
The chance of losing all or a large portion of your investment is simply not worth it. You always need to consider the potential downside - and what can (and sometimes does) go wrong.
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I will be away until Monday, 11th April.

For urgent issues, please email me on brett@bdfinancial.com.au to TXT my mobile.  These will be checked daily.

Best regards,
Brett

 

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