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ADF Financial Services Consumer Council
ADF Financial Services Consumer Council
Army November 26, 2009
cial advice as part of their between-
The important thing is to feel con-
fident you understand your investment
options so you can make informed
decisions, whether through an adviser
or by doing your own research.
The key to making informed invest-
ment decisions is to understand the
risks involved. Generally, the higher
the returns the higher the risk. But no
matter what the returns are you always
need to do your homework.
One between-the-flags strategy to
minimise your investment risk is to
spread your money across a number of
This is known as diversification
and lets you cope with short-term mar-
ket movements. It’s the answer to the
age-old warning that you should never
put all your eggs in one basket.
So if you’ve managed to set up a
plan, considered advice, done your
homework, assessed the risks and
diversified your investments, you’re
investing between the flags.
All you need to do now is moni-
tor your investments and adjust them
if conditions or your circumstances
change. Don’t just set and forget, even
if you have a professional adviser.
For more about investing, get a copy of ASIC’s
new booklet Investing Between the Flags by
phoning 1300 300 630. Or you can download
a copy from www.fido.gov.au.
Email ASIC with topics that interest you via
Swim in charted waters
HE ability to plan strategi-
cally is a skill most ADF
members have. It’s a skill
that helps you make informed
decisions based on evidence and your
If you’re interested in investing, the
first thing you should ask yourself is
“Am I ready?”
Before you invest
People think about investing for all
sorts of reasons. You may have come
into some money from a deployment
allowance, inheritance or gift, or you
may have a specific goal in mind – to
build a deposit for a home or to take an
overseas holiday, for instance.
Whatever your reasons, before you
invest there are three things you need
to have checked-off first.
Are debts under control?
Careful budgeting is the first step to
reducing debt. If you owe money, are
your monthly repayments comfortably
less than your monthly average house-
hold income? Do you have a problem
paying off your credit cards, mortgage
or other personal loans?
Do I have emergency money?
Do you have cash savings you can
draw on in an emergency? A good rule
of thumb is to have ready access to
cash equal to three months of house-
Do I have insurance?
AS ADF members you may have
some insurance cover automatically.
The key is to make sure you know
what you’re covered for and what is
excluded. For example, your home,
contents and car are likely to need per-
sonal insurance cover.
Are you an investor?
An investor is someone who puts
money into a product or an asset in
the hope of increasing their capital or
extracting an income – or, better still,
doing both. That means just about all
of us invest, even if it’s money in bank
accounts or super funds.
Certain investment behaviours
should keep most people out of trouble
most of the time. However, investing is
never risk free.
We say some investment behav-
iour is “between the flags” and some
is “outside the flags”. Just as you will
reduce your risk of drowning by swim-
ming between the flags at the beach,
you will reduce the risk of losing your
money if you place it between the
We all have different experiences
and goals. So your flags are likely to
be placed differently to those of your
parents, children, neighbours, friends
and other ADF members.
The key to recognising what is
between or outside the flags for you is
understanding your own circumstances
Between the flags
You will be investing between the
flags if you’ve identified your current
position and have plotted your future
Having a plan that meets your goals
and suits your style will help you to
make the most of your investments.
Be sure your plan takes account of
your personal situation. For example,
if you are likely to be posted overseas
for six months you may need addi-
Many people seek personal finan-
Before you dive into investment decisions,
Tony D’Aloisio, Chairman Australian
Securities and Investments Commission,
recommends you set out a strategic course.
Test the waters: By investing between the flags, you can reduce your
risk of drowning in debt.
Photo by AB Lincoln Commane
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