Total recorded assaults on Police - New Zealand Police Association

PoliceNewsThe Voice of PoliceMaking the most of your investmentsAfter the chaotic years of 2008 and 2009, which the International Monetary Fund described as the‘Worst financial crisis since the Great Depression’, investors are now seeing a reversal in the fortunesof the world’s economies and financial markets as they move back into positive territory.By Spicers, providers of Police Financial PlanningPatience is a virtueInvesting with a long-term time horizon and having the patience to rideout the impact of short-term fluctuations will ensure you maximisethe growth of your investments. The old adage “Patience is a virtue”applies when investing too. Investing for the long term gives the benefitof long-term market appreciation and compounding returns.Random investment strategies may work for a few months or even afew years. But fortunes aren’t made in a matter of months or years.They’re made over decades of regular saving and investing. Investorsthat blindly rush from one strategy to another rarely prosper in thelong run.Have a plan and stick to itThere are countless paths to financial success. However, investorswho find a plan that they are comfortable with and stick to that plan,across market cycles, stand a much better chance of reaching theirfinancial goals.Take the emotion out of investmentEmotion is the enemy of commonsense. It often leads to investmentin the wrong market or at the wrong time. A classic example wasthe hyped-up 90s boom in technology stocks, which saw shareprices rise significantly above any realistic or justifiable levels.When the crash came, there were reports of many fortunes beinglost. The following illustration is an example of what we consider acommon approach to investment where emotions can override sounddecisions.A good plan gets good results over timeAlthough historical performance is not a guarantee of futureperformance, our research shows that markets generally riseover time. If markets continue to rise over time, it follows that themore time you allow, the bigger the potential rise you are likely toexperience.Investments such as the Police Superannuation Scheme will do thisfor you if you leave it to grow. Switching in and out of superannuationfunds based on decisions on what has already happened limits thescope of the respective funds to deliver the potential returns that canbe achieved.Don’t put your eggs in one basketDiversification is about spreading your money across different assettypes i.e. cash, fixed interest, property and shares, and differentinvestment markets throughout the world. Studies show thatdiversified investment portfolios produce higher and more reliableinvestment returns over the long term.This helps ensure you are able to take advantage of many investmentopportunities while minimizing the potential risk of eroding your hardearnedsavings from one bad decision. Investors who put all theirhard earned money in failed finance companies learnt the benefits ofdiversification the hard way. Investing in superannuation funds is agood way to achieve effective diversification.Research your optionsInvesting blindly is asking for trouble. Do your homework. A lot ofinvestors will spend more time planning their holiday on the Internetthan researching their investments or working with a good financialadviser who can provide qualified guidance.Spicers investment team provides access to the global resourcesof more than 5,000 specialist investment and financial planningresearchers. Money is invested in the best funds and is activelymanaged to optimise returns and minimise risk for clients, providingstrong diversification and protection against market volatility. Thisapproach ensured we were one of the few financial planning firmsthat advised clients not to invest in finance companies!Liquidity is goodBecause you can’t predict the future, it’s also important to ensurethat a slice of your assets are as ‘liquid’ as possible. Liquidity is theease with which you can convert your assets back into cash. Cashis normally the most liquid asset because it has the most certaintyof value. A house is much less liquid because sometimes it can bedifficult to sell and the value obtained can fluctuate.While superannuation schemes are not immediately liquid - becausethey’re a long term investment for retirement - a complementary setof investments can be put together to meet short to medium financialneeds, such as saving for a holiday or deposit for a new house. It’salso advisable to have an emergency fund that will last for at least sixmonths.Make it happen and save some investment taxIt could be time to take advantage of the 30% tax cap on PIEinvestments, but get good advice. If advice is important in goodmarkets, in tough times it’s essential. Work with your adviser so youmake the right choices.72April 2010