{"id":14241,"date":"2019-01-30T14:33:04","date_gmt":"2019-01-30T04:33:04","guid":{"rendered":"https:\/\/www.prosolution.com.au\/?p=14241"},"modified":"2019-01-31T08:27:26","modified_gmt":"2019-01-30T22:27:26","slug":"strategy-then-investments","status":"publish","type":"post","link":"https:\/\/wealthcoach.com.au\/stage\/strategy-then-investments\/","title":{"rendered":"Warning: Don\u2019t make your strategy fit your investments (or let anyone else do it)"},"content":{"rendered":"

\"strategy\"
\nOne of the biggest mistakes that people make is they make a few investments and then, after a few years\/decades, try and figure out what their strategy looks like. That is, they build their strategy around their assets. Many financial services and property businesses do this too. They design or market investments that suit their client demand and, as a result, compromise investment principals\/fundamentals. As I explain below, strategy must always come first.<\/p>\n

Sexy investments sell<\/h3>\n

The most successful way to sell investments is to market them using the two primary emotions of fear<\/em> or greed<\/em>. An investment that promises high returns with little risk will typically have great appeal to the mass-market. The problem is that sexiness and fundamentals are almost always inversely related. Fundamentally sound investments are usually dry, dull and boring. Therefore, it is difficult to get people excited about them. However, shiny objects attract a whole lot more attention.<\/p>\n

The fastest way for a financial services business to attract more investors is to market sexy investments. The problem with this approach is that whilst it might deliver short term profit (to the business \u2013 probably not the investor), it is at the expense of creating long term value for both the business and the investor.<\/p>\n

Be sceptical of businesses that market investments<\/h3>\n

No one trusts used-car salespeople. The reason is that we are well aware that their goal is to make a sale and they might say or do anything to achieve that goal. It’s not that they are the enemy or bad people. It\u2019s just that we have a very healthy level of scepticism for anything they say or do.<\/p>\n

The same is true for any financial services business that markets investments. Their goal is to highlight the benefit of their investments and pitch to you why it is perfect for you. Therefore, you must maintain a healthy level of scepticism. If you want to find someone you can trust, find someone that has nothing to sell you (other than their advice).<\/p>\n

Here are two different examples of what I\u2019m talking about:<\/p>\n