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Investment Failures

Investors Saved by the Taxpayers

This week, the Crown Guarantee has been severely tested with the receivership of South Canterbury Finance. No one will know the final cost to the tax payer until the receivership is completed. This is likely to take years, as the Government will not want to put undue pressure on borrowers who most likely are already under significant financial stress.

Dealing with Risk

All investments carry a degree of risk, as many investors have learned the hard way over the last few years.  Even bank deposits are not risk-free. Hundreds of millions of dollars were lost in these in the United States over the past few years, and banks are still collapsing there.

Protecting Against Inflation

Inflation can be really nasty. Those of us who can remember the 1980’s in New Zealandknow that inflation was high, running at close to 20%. We can also remember wage freezes, and the maximum interest rates that were chargeable on mortgages. Inflation is something that all investors should worry about.

Investment Bubbles

It seems that most decades, a new investment bubble emerges in financial markets.  Normally it starts out as being quite plausible, then gains momentum and runs to ridiculously high levels, levels off and then comes crashing back to earth.  The losers are invariably those who got onto the bandwagon late.

There Is More To Fixed Interest Than Just Interest Rates

There is a lot more to choosing a term deposit or bond than simply looking for the best interest rate on offer. No investment is totally free of risk.  All investments involve some trade-off between risk and return.  While bonds and bank deposits may be a more secure form of investment than some other asset types, they cannot be considered fully secure. 

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