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Capital-protected investments

Discussion in 'Investing Strategies' started by Simon Hampel, 30th Apr, 2008.

  1. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Sydney, Australia
    CHOICE - Capital-protected investments

     
  2. AsxBroker

    AsxBroker Well-Known Member

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    8th Sep, 2007
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    Location:
    Sydney, NSW
    Just like having money sitting in a bank account earning no interest.
    Guaranteed (by the bank) but your losing to inflation :(

    I imagine anyone in the Macquarie ALPS5 series has a bad taste in their mouth now...(and for the next 6 years)
     
  3. Rob G.

    Rob G. Well-Known Member

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    6th Jun, 2007
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    Location:
    Melbourne, VIC
    Exactly ... in fact even worse if your opportunity cost is higher.

    My experience has been that when you have paid to take a put option over your portfolio then you tend to hold the loss position for far too long - smug in the knowledge that you "can't lose".

    BUT ... if you had jumped ship copping a small loss and moving into a better rising investment months earlier ... that is your opportunity cost.

    The psychology seems to be the very opposite of having a stop-loss to make you more nimble and objective with your investments.

    I believe as a tool they have their uses, but I think people do not consider the suitabiltiy to their investing style and objectives.

    For instance, you might be legally required to have some non-recourse feature as part of borrowing if you are a SMSF.

    Or alternatively you may be required to hold a given parcel of securities for a period of time and the market is looking shaky.

    Horses for courses, but do your homework.

    Cheers,

    Rob
     
  4. aln1001

    aln1001 Member

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    18th Jun, 2008
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    Location:
    sydney nsw
    Wow, thanks for the information. although now I'm not so excited about reflexion. My financial advisor seemed very positive and said that it was a good time now because the dollar is level with US and so there is bound to be a drop in the next 7 years. I was going to go in before the end of this financial year and benefit from the tax deduction of the fees. Has anyone actually had success with reflexion? or am I being too chicken?