Stories | September 3, 2010

You seem familiar

Don't confuse the familiar with the safe in investing

Are we too scared to diversify investments across international boarders?

Don't confuse the familiar with the safe, warns a CBS Moneywatch story listing five retirement mistakes to avoid. It says investors tend to become more conservative as they approach retirement, which is "appropriate" and in line with the lifecycle approach to investing. But it warns "seeking safer investments can lead you to confuse the familiar with the safe". It gives the example of people in the United States being familiar with US investments and therefore thinking they are safer than international investments.
"Actually, adding international equities to your portfolio reduces your overall risk," says the story.

Don't invest in something you don't understand
Investors may be able to overcome the problem by spending some time to research investment choices - or by hiring in expertise. Understanding investments is important, with ING Group chief economist Mark Cliffe urging investors to "keep it simple" in his seventh video lesson from the financial crisis.
"Don't invest in something you don't understand - and don't be afraid to ask the hard questions of your financial adviser," Cliffe said.

eZonomics team
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