How did so many people, loose so much money?

As a large number of clients have contacted me about the Guardian First debacle, which is often connected to Netwealth and a several other investments platforms in the media, I thought I would dedicate this newsletter to explaining it.

Not that I have any insight into this disaster, although clearly, I have been reading as much as I can from the media’s coverage of events, but my experience as a financial adviser, and previously as a journalist, tells me there are no surprises here.

It just the same old story. A group of not particularly clever finance executives crossed some lines in raising funds from members of the public, who choose to ignore higher returns means higher risks, and then had their funds squandered.

To start I will try to explain what appears to have happened and then to outline how the various investment platforms, including Netwealth, appear to have become caught up with it.

More importantly perhaps, I will outline why is it ordinary people appear to have lost a billion dollars in precious superannuation savings and why there were no safeguards in place to protect people loosing so much money

Sadly, this disaster only happened because of the same old story of ordinary people believing you can achieve significantly higher returns without taking on significantly higher risks. No laws will stop this.

People who didn’t really have much expertise in managing large sums of money, suddenly took control of their superannuation savings worth hundreds of thousands of dollars, then made some basic mistakes and ended up losing their money.

Always remember if you can double your money, you can lose all your money.

Then of course is the question to be answered is, well is my super safe and are my funds tied up in shonky investments? In this article, I will try to explain why I believe direct equities are a safer option to managed funds.

Finally, I will try to answer, where to from here? How do ordinary mums and dad’s make good decisions about their super savings that don’t end up with them losing the lot as so many of these investors sadly did?

Importantly, if you know of anyone who is unsure how to arrange their finances as they move into retirement, please encourage them to contact me. It could be a lifesaving, if not retirement saving, moment for them.

Patricia Howard

0427 429 817

Patricia@patriciahoward.com.au