How do you choose to invest your and your family’s savings? Do you prefer a safe and risk-free investment or do you think the risk is part of the game?
Italian families, by custom, are still fond of their old bank’s good savings. It is still a valid choice as long as you respect some fundamental rules to cancel or at least limit the risks deriving from your type of investment.
Four simple rules to protect your family from unnecessary risks
The rules imposed by Consom and Evatt particularly control the adequacy and transparency of financial instruments. Nevertheless, if you are an inexperienced client, your family can fall into certain traps that can seriously jeopardize your hard-earned savings.
There are four simple but important rules to keep in mind before embarking on any kind of investment or sum because you put yourself on guard beforehand and you prevent most of the unnecessary risks that can bring very serious consequences to the serenity of your family.
1. First rule
The first rule you need to follow is to pay attention to the completion of the Mifid questionnaire that talks about the financial situation and the knowledge about your family’s investments.
2. Second rule
The second rule is to define your investment objective and a reference time horizon , ie how long you intend to keep your savings busy.
If, for example, your family needs to disinvest before the security or product expires, it is essential to have an idea of the times and costs that are likely to be faced and those needed to do so in order not to get lost.
3. Third rule
Defining personal risk appetite is the third fundamental rule because one must be cautious and not be tempted to make too sophisticated investments of which the implications are not understood. In short, we must not be attracted by the idea that there are investments that make so much and are not very risky. A high yield always corresponds to a higher risk , without exceptions.
Thus, even if you have heard about it on television or in newspapers, it is not appropriate, for example, that you say, by answering the Mifid questionnaire, that you know the derivatives. Do not distort the evaluation of the questionnaire or expose your family to offers not suitable for your real investment opportunities.
Having clear investment purposes means being aware and having realistic expectations of return consistent with one’s life needs.
4. Fourth rule
The fourth important rule to keep in mind is that of not investing everything in a single financial product or in instruments issued by the same company.
The ideal is to choose different investments for each issuer, sector and maturity. Diversification makes it possible to considerably reduce the overall risk. Many savers in fact, especially in very prolonged periods of uncertainty, still keep money in the bank, on the current account or in a restricted deposit, which, together with postal savings bonds and government bonds, are the traditional investment tools for families , but it is not always the best choice. In fact, there are other instruments that are just as safe and in some cases as superior performance as for example Pac and Pir , it is advisable to take them into consideration and ask for information.
Conclusion and final suggestions
- When the bank tests your risk appetite , ask the questions in the Mifid questionnaire, be honest. Don’t be afraid of appearing ignorant and don’t let yourself be influenced by the promoters of the bank. The type of investment, more or less risky, that they will advise you depends on your answers.
- Read well, ask questions, make sure you are in a position to take advantage of a bonus for your deposit or for the savings account in the bank or at the Post Office.
- The promoter’s explanations may be incomplete or unclear because they are aimed above all at the interest of the institute and not yours.
- Don’t exult too much if you find an old non-cashed interest-free voucher or an old savings account in a drawer between your grandfather’s cards. In the best case, you will be able to get the reimbursement, but without revaluation of the currency: the old million lira is always worth more or less 500 Euros.
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