When I first started thinking about investing five or six years ago, I had no idea where to start. I didn't know anything about what investing involved, just that it seemed very complicated.
Pop quiz: where is the best place to get investment advice?
a) a no-fee adviser that works for a bank or other financial institution
b) a no-fee independent adviser
c) a fee-based adviser
The answer, of course, is d) learn as much as you can and do it yourself. No one else is going to take care of your finances as well as you are.
My own experiences of a, b, and c above, might cast some light on this.
a) A couple of weeks ago, I went into Resona Bank in Sendai to ask about a specific financial product (more on this in future posts -it's golden) and met with one of the bank advisers. She spent ten minutes assuring me that the product I wanted didn't exist and wasn't one I was eligible for. Instead, she told me my only option was to buy retirement insurance (seldom a good deal for anyone but the one getting the commission). Eventually I walked out.
b) There is a company in Japan (let's call them Flag) that markets heavily to English teachers. They have a wide variety of products that they recommend. Unfortunately their business model depends on receiving commissions from the companies providing the financial products. These products often have harsh early redemption penalties. This is because most of the first year or two of contributions go towards paying the commission to the agent that sold it. Probably not in the customer's best interest.
c) This is the best option, as the adviser in this case is working for you. Unfortunately, you still need to know enough to be able to tell if your adviser is a good fit for you. You also need to pay them, which will be hourly if you go for the cheapest option, or as a % of your assets under management if you pay a lot. Finally, let's think about it. If someone was a brilliant investor, would they be trying to get your business, meeting with you, worrying about your portfolio? Of course not. They'd be on their private island off the coast of Belize.
Luckily for us, one of the most effective investment strategies is also one of the simplest.
Let's talk about it later on.