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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

    9th Jun, 2005
    Sydney, Australia
    CHOICE - Capital-protected investments

  2. AsxBroker

    AsxBroker Well-Known Member

    8th Sep, 2007
    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

    6th Jun, 2007
    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.


  4. aln1001

    aln1001 Member

    18th Jun, 2008
    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?