Fin Advisor advises move to Enhanced Yield over Cash

Discussion in 'Financial Planning' started by maza, 6th Jul, 2009.

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  1. maza

    maza Member

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    My FA has suggested moving current fund from Allocation Pension Cash to Allocated Pensions Enhanced Yield. He states the fund is considered defensive
    with very good trade off coming from Hybrid Securities and Corporate Bonds.
    All too hard for me.

    Any help appreciated.
     
    maza, 6th Jul, 2009
    #1
  2. Andrew Newman

    Andrew Newman Well-Known Member

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    Hi maza

    One of your rules as an investor is never invest into anything you don't understand.

    Cheers
     
    Andrew Newman, 8th Jul, 2009
    #2
  3. ashes

    ashes Well-Known Member

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    Do you remember CDOs? Those things which have become worthless recently (and perhaps helped cause this whole mess we are currently in.) They were consider Enhanced Yield and Low Risk. Most people did not understand what they were investing in, and have hence lost lots of money from a low risk investment.

    I am not saying anything about what your advisor is recommending. But I would follow Andrews advise. Don't invest in anything you don't understand. There are plenty of easy to understand investments out there.
     
    ashes, 8th Jul, 2009
    #3
  4. C3PO

    C3PO Well-Known Member

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    C3PO, 8th Jul, 2009
    #4
  5. AsxBroker

    AsxBroker Well-Known Member

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    Hi Maza,

    As C3PO has pointed out, you should ask your planner if it is going to cost you anything to switch from one investment to another.

    Cheers,

    Dan
     
    AsxBroker, 11th Jul, 2009
    #5
  6. C3PO

    C3PO Well-Known Member

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    I would go a bit further than that if it were me. I would ask:

    1. How much better do you expect the enhanced yield to perform over cash in the next (a) 12 mths (b) 24 mths (c) 5 yrs ?
    2. Why should I make this switch now?
    3. What commissions would be generated for you, as my advisor, if I do nothing?
    4. What commissions would be generated for you, as my advisor, if I make the switch?

    Once you have straight answers to these questions then I think you will be fully informed to make a decision to suit your personal circumstances.
     
    C3PO, 11th Jul, 2009
    #6
  7. Andrew Newman

    Andrew Newman Well-Known Member

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    Hi C3PO

    Good questions but be aware that 3 & 4 have to be provided by law using an advice document such as a Statement of Advice. In relation to question 1, be careful when asking about future returns.

    Cheers
     
    Andrew Newman, 13th Jul, 2009
    #7
  8. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Anytime someone asks me a question along these lines, my standard answer is 'I don't know'. Anyone that gives you an answer other than 'I don't know' is being predictive.
     
    Mark Laszczuk, 17th Jul, 2009
    #8
  9. maza

    maza Member

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    Switch to PM Capital Enhanced Yield

    Thanks all for your responses. I'll stay where I am for the time being.:)
     
    maza, 17th Jul, 2009
    #9
  10. Dolfinwise

    Dolfinwise Active Member

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    All too hard

    Maza as a financial adviser if you don't completely understand it don't do it. The advice industry is built on complicated structures and products to ensure everyone makes plenty of fees. The result is investor constantly getting lousy returns on the fees they pay and worse sometimes completely lose their capital. A good investment portfolio does not need to involve complicated products.

    Regards
    Jason
     
    Dolfinwise, 30th Sep, 2009
    #10