Why read this section?

Sadly many people are a great deal financially worse off than they need to be.

Over the years Christoph Schnelle, the founder of In Your Interest Financial Planning, became aware of more and more cases where people were financially damaged through ignorance, poor advice or deception.

There is a difference between delegating and giving your power away.

If you delegate you have a means of checking whether the work done is of value for you. If you have no means of checking the quality of the work, you have given your power away and you are very vulnerable. This section attempts to give you enough knowledge to check the work of a financial advisor.

Invest 30 minutes now and you could save one million dollars later. That is a return of $33,333 per minute with no fees, commissions or taxes - an excellent investment!

The power of percentages

One of the biggest mistakes that investors make is to underestimate the power of percentages. They continuously give away a percent here and a percent there.

A 40 year old has an investment horizon of 40 more years or even more. Investments do not stop when you retire - your invested money continues to work.

If that 40 year old loses (or does not gain) an extra 3% a year, they lose half their investments by the time they are 63 - instead of, for example, $2 million the investor has under one million and it gets worse as they get older

Here is how easy it is to throw away percents:

• lose 1% because
  some funds charge 2% a year and others charge less than 1%
• lose ½ %
  some financial planners take commissions or charge high percentages
• lose ½%
  some funds buy and sell shares and you lose another percent here and there through taxes and transaction costs.
• lose 3%
  some investments return a higher percentage than others as outlined in the page How risk and return are related.

The example above where the investment was halved was based on only 3% - the points above add up to 5% so you can imagine how much greater the loss would be.   =>  read more

How risk and return are related

Many people have a negative emotional reaction when they hear the word "risk".

Harry Markowitz won the 1990 Nobel Prize in Economics for explaining the relationship of risk and return in his theory of portfolio selection. He asserted that there was no such thing as a low risk high return investment.

It is important to understand the meaning and significance of the term "risk" as it is used in the Financial Planning industry. An emotional reaction and failure to understand this issue can have a devastating effect on your finances.  =>  read more

The human element in investing

There is a whole branch of economics called behavioural finance which concerns itself with the interaction of psychology and investing. This page provides a few snippets and explains that the majority of people take actions to lose money - know thyself!  =>  read more