Imagine this. You're sitting in your favourite corner of the pub with your pint and the daily paper minding your own business (not too hard to imagine, really). A man you vaguely recognise comes over and interrupts your reading. He starts talking about investments and during the course of the conversation he asks you what percentage of your savings would you invest in a market that can frequently offer good returns of 10% or so, but has lost 50% of its value twice in the last 10 years?
Somethng similar to the above scenario actually happened to me quite recently. It didn't take me too long to work out that this sounded like a very high risk investment and really wasn't my thing. I said so, but the man insisted I think about it just for the sake of argument. And so I said that, if I had some spare risk capital (which I don't) that I didn't mind losing, I might put 10 or 20% of that into the sort of higher risk investment that he was presumably talking about.
He then asked me how much of my pension fund was invested in the UK stock market. The penny dropped. The FTSE has lost 50% of its value twice in 10 years. Makes you think, doesn't it?
Be well.
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