There are phrases and questions that roll off the tongue yet their interpretation and understanding of the situation vary considerably from person to person. When it comes to investing or protecting your nest egg we all have very different ideas of what constitutes a “safe investment”.

In reality, a safe investment only relates to your situation. What others deem to be safe might seem pure folly to you. It depends on your needs and financial goals. Therefore, you need to fully understand how much risk you can accept.

Safe as Fort Knox

Another thing to consider is that your money should also be working for you whilst you have it invested. It is one thing to be guaranteed to get your money back when you need it but if the return you are getting is minimal, as in a simple trading bank account, with inflation, your money might actually be going backwards. This scenario might be quite acceptable over three months but over 20 years, your money might be as “safe as Fort Knox” but it would be neither safe nor wise to invest that way. It depends on what “safe” means to you.

Safe as houses

Over the long term, wise property investments will prove safe but you have to choose your investment carefully. We have seen incredible booms in the property market, but real estate value can decline. When compared to average income, many Australian cities and towns are becoming less affordable on world standards. So what was once considered “safe as houses” may not apply any more. An alternative to the residential property market is commercial and industrial property. Where residential property values are often determined by mums and dads with a lot of emotion in the decision, commercial property values are determined by business people who hopefully think more rationally about purchasing decisions.

Avoid glib investment clichés

There is no shortage of clichés when it comes to investing such as, “The stock market is not safe” and “property is always a safe bet” etc. Be careful of them. “Safe” depends on your investment requirements and many of your personal character traits. Some people thrive on risk and market fluctuations whilst others are just interested in certainty.

If you are considering investing and looking to start a portfolio or maybe diversifying an existing one, talk to Vicki Adams at Saward Dawson. One of the first things that Vicki will discuss with you is what sort of investor you are and what “safe” means to you.