Tony Alexander

Economic Commentaries

If I Were An Investor

Tuesday February 23rd 2016

With increasing frequency in this new sustained low interest rate environment people are asking me to include a section in the Weekly Overview entitled “If I Were An Investor What Would I Do?” I cannot do that and here is why.

Whereas all borrowers are largely the same in their situation and goals, all investors are unique. When sitting down to discuss potential investments with a client an authorised advisor (I am not one) will seek to determine the time horizon over which the investor wishes to save then draw down their funds, their sources of income, their acceptance of risk, their knowledge of products on offer, their vulnerability to shocks and so on. These things differ vastly from person to person.

My recommendation is that people wondering what to do with their investments do two things. The first is accept that the world has changed since the global financial crisis and investors need to lower their yield expectations. If you don’t then you will chase yield and possibly fail to recognise that means accepting a lot more risk.

Second, speak with an authorised investment advisor about your needs, perhaps one of our BNZ Private Bankers.

All the best, good luck, and be very careful about developing a portfolio of assets who’s returns are highly dependent upon forecasts of things like commodity prices proving correct. Literally millions of people this past decade have proved that they, we, cannot forecast prices for oil, gold, iron ore, coal, dairy products, exchange rates of course and now not even interest rates.

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