What makes a dud investment a dud?

By Grace Ormsby

August 21 2020
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A wrong investment is only wrong to the wrong person, an investment director has flagged.

While COVID-19 has made the effects of a bad investment more prominent than ever, Wealthi investment director Stephanie Davies has countered such concerns, explaining that having a lemon in your portfolio isn’t the end of the world.

She considers bad investments a great opportunity for investors to learn from mistakes and make a positive change going forward.

“We have so many clients coming into our world having made a wrong turn before,” she commented.

“It’s great because as long as they learn from their mistake, and get help the second time around, they can get back on track,” the investment director advised.

With a bad investment always making a good one “so much sweeter”, Ms Davies said identifying what actually made an investment decision the wrong decision is vital to avoiding a repeat offence.

“Identifying what makes it bad is really important. Is it that the yield is so high that you are not getting the tax advantages and capital growth which may suit your situation better? Or is the yield too low and crippling your cash flow?”

It’s why it’s worth remembering: A wrong investment is only wrong to the wrong person.

“Take a yield versus cash flow strategy, for example. There are so many things to consider that what’s good for one might not be for the other,” Ms Davies said.

This stance led the director to acknowledge a range of new investment opportunities: “Currently, the uncertainty in the market is uncovering opportunities to capitalise on the incentives and cash flow requirements of businesses that are trying to adapt to the changing market conditions. This doesn’t suit everyone but definitely a space to watch.”

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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