For anybody who likes to read and learn about investment, it’s no secret that there’s a big difference between public perceptions of investment strategy and the stuff that advisors would typically recommend. If you read this blog, you’ve hopefully learned some truly helpful strategies to maximize dividends, while minimizing risk. But there are a lot of people out there who don’t know the first thing about how to do this. That’s not to say that they’re not smart people. Most people could comprehend these things, but they’re not taught in school, at least not the kind of schools that most people go to. For the rest of us, we’ve got to spend some time learning the basics of sound investment. Otherwise, there’ll be big differences between the stuff we think we know and actual sound investment strategy. Here are some examples from a recent Lottosend poll.
This poll was performed in the UK, hence the slight difference in terms. But you’ll quickly see that the folks’ perceptions of investment are pretty closely related to the things that regular American people think.
Investment Type / Percentage
Property Investment / 33.40%
Tax free ISA allowance / 32.70%
Investing in Stocks and Shares / 11.60% Investment
Trusts / 8.20%
Asset Investments / 6.70%
Unit Trust or OEIC / 4.10%
Tracker Funds and ETFs / 3.40%
Some of these investment forms are European specific, but most aren’t or at least have American counterparts, so all of our readers should be able to glean some knowledge from this list. The first thing that stands out is the people think property investment is the best way to go.
I’m not going to say that it’s not a sound investment strategy, properly handled. But few investment advisors (if any) would recommend that someone become totally invested in property at the expense of all else. Most would say that this isn’t the best start with investment,and I would agree.
This is the case for several reasons. 1) There is a ceiling to how much value a house or business property can take on, not so with investment accounts and the like. 2) Properties require improvements and maintenance. 3) For most people, property represents a single deep investment, meaning that if anything goes wrong with the single investment, the individual is in a tough spot. Investment properties can, indeed, be excellent investments, but they should usually be invested in after other, more diverse, investment options are locked down.
The ones I typically recommend are located at the bottom of this poll. ETFs, properly chosen through services like Betterment, are one of the safest ways to have serious investment growth over years and decades. Unlike property, there’s no limit to how much an investment can increase, because time is unlimited. Sure, it’s not unlimited for a person, but if an investor starts young, he or she can have several decades to enjoy dividends and compound interest.
My takeaway from this poll is that the average person needs to learn a little more about investment. It’s hard to become meaningfully invested without laying the groundwork found through knowledge, and it really doesn’t take that long to learn it. But learn it we must if we’re going to make investment a good use of our time and energy.