Sir Alan Sugar and the numpties

Wednesday, 4th February 2009 23:41 - by Resident IFA

My descriptive term, not his! What am I referring to? Well, Sir Alan wrote an article that appeared in last weeks Mail on Sunday, in which he strongly questioned how wise it is to put your hard-earned money in the hands of so-called experts…or ‘the eminent firm of Tosser, Pillock and Wally’ as he tactfully put it. I think he summed up the collective lack of common sense a stockmarket bubble brings brilliantly with ‘they got caught by investing in financial instruments that appeared to offer returns far greater than common sense says should be possible’. Sir Alan also admitted to a cardinal investment sin with his post-Amstrad float monies. He invested in an equity market he didn’t know (Japan), simply because he trusted the business ethics of that country. So busy was he with making Amstrad a success, that he agreed to invest ‘On impulse’, and ‘blindly signed’ over money to a Broker. Now, I have no doubt that Sir Alan Sugar is not what a Financial Adviser would nowadays term ‘risk-averse’, but investing directly into equities in a foreign market…well. Fortunately, Sir Alan learns lessons from all his experiences, good or bad, and is now worth millions and millions of pounds. Investment management has moved on since the 1980’s, but the article reinforces a couple of key basic points when considering an investment: - Ensure you are entirely comfortable with the risk the investment holds, trying to understand your own attitude to risk fully. An Adviser should be able to help you in this assessment - but make sure they cover the important concept and relationship of risk & reward to your satisfaction. - Read the small print and take an active interest in your investment. You hand over responsibility of investment monies to a professional for a good reason, but it is still your money! Keep abreast of how it is doing and challenge your Adviser to explain all relevant developments. Sir Alan sounds a little ‘burnt’ by his early investment experience, but at least he saw, and still sees, commercial property as a safe bet! Until next time…