By Amanda Morrall
1) Mighty River Power - is it for you?
Let's put aside the philosophical, emotional and political arguments about whether Mighty River Power (MRP) being partially privatised is a good move. The real question you should be asking yourself now, is whether buying shares in this or any of the other state owned entities (SOEs) coming on the market makes financial sense for you. Financial writer and investment expert Martin Hawes, in this opinion piece published for Business Day, shares his three-stage personal approach to investing and applies it to the MRP offer. Sensible advice.
I have a three-stage process when considering buying any investment, and this includes whether to buy MRP. The first is to look at my own position: where I am at financially and whether this investment suits my situation. The second stage is to look at the quality of the investment itself.
The third stage is to consider if the price is fair.
The first stage is the most important - your own suitability. The important thing for most is whether you have a mortgage. If you do, you can almost certainly ignore MRP and its salesmen because you are not suitable for making this investment.
For more on the SOE floats, you can check out my five-point plan here.
2) Questions your assumptions
4) Risk and reward
In the experience of financial advisors, investors often fancy themselves big risk takers. It's not until they lose money that their clients realise their appetite for risk is sorely out of line with their perception of it.
I would question the accuracy of a one minute questionnaire, but it's a starting point for the conversation with yourself and then your advisor. Here's one from The Age's Money section.
5) Marketing is dead
It's a bold statement but if you read this column published by the Harvard Business Review you might be convinced that all that money earmarked for marketing your business would be better spent elsewhere.
Author Bill Lee suggests that peer influence has a stronger sway these days than ads people are choosing to ignore. Food for thought if you have a big budget for your small or medium size business.
To read other Take Fives by Amanda Morrall click here. You can also follow Amanda on Twitter @amandamorrall