Thursday, 17 October 2013

Survey Shows Quarter of Investors Do Not Have Financial Plan

Nationwide Funds, which surveyed 783 potential investors with a minimum of $100,000 in assets, has revealed that nearly 25 percent of the investors they spoke to have no financial plan. Moreover, approximately 40 percent of that group does not anticipate developing one either. When asked what the barrier was, one third of the respondents surveyed said they have not consulted a financial professional for a variety of reasons; the 2 most common being: no desire to pay the associated fees and feeling confident that they can accomplish the planning on their own. Whatever the reason, the number is staggering, and shows that many investors have no direction with their finances and are potentially looking at losing a lot of money; if they are not careful about their choices.

Among other things, it would seem that a genuine lack of interest is one of the biggest reasons why this portion of investors have done little to no financial planning. For the most part, Americans (for example) are primarily concerned with paying for health care costs, retirement readiness and saving for their children's education. Moreover, when shocks in the stock market and events such as the American government shutdown and the threat of a U.S. government debt default make investors apprehensive, they second-guess traditional investment offerings.

Whether it can be attributed to political uncertainty, disruptions in the financial markets and/or having no desire to pay fees, many investors have failed to establish a financial plan for the future. The survey by Nationwide funds shows us that astonishingly one-in-four investors do not have a financial plan, and are not likely to develop one soon. Luckily for them, the emergence of alternative investments has introduced opportunities that are much easier to understand, than stock and bond markets, interest rates and international politics. Although these options are no substitute for sound financial planning and a well-diversified portfolio, they do offer steady investment returns with much less associated risk, for investors who feel confident to make investing decisions on their own.

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