Invest
Be wary of ‘hard-to-understand’ products
Ten years on from the global financial crisis, investors are being warned to be cautious of buying into products which are difficult to make sense of.
Be wary of ‘hard-to-understand’ products
Ten years on from the global financial crisis, investors are being warned to be cautious of buying into products which are difficult to make sense of.

Shane Oliver, the leading economist at investment firm AMP Capital has urged investors to be careful when investing in products created through “financial engineering” or which are hard to understand, noting similar products played a key role in the GFC.
“The GFC was the worst global financial crisis since the Great Depression,” he said.
“It saw the freezing up of lending between banks, multiple financial institutions needing to be rescued, 50 per cent plus share market falls and the worst post-war global economic contraction.”
This was spurred on by a “massive easing” of lending standards, allowing people to receive loans they were unable to service and packaging these loans with other loans to create securities to be sold to investors, Mr Oliver explained.

These products were then given good ratings as a low-risk investment “on the basis that while a small proportion of loans may default, the risk will be offset by the broad exposure”, and then sold to willing buyers under “fancy names”.
Not only did these products play a role in bringing about the subsequent crisis (which occurred after the US central bank drastically increased rates, leaving many people unable to pay their mortgages), but investors who held these particular products were also the most badly affected.
“The biggest losses for investors in the GFC were generally in products that relied heavily on financial engineering purporting to turn junk into [well-rated] investments that were impossible to understand,” he said.
Mr Oliver acknowledged that any potential future market crisis is unlikely to take the same shape as the GFC did, but warned there will be similarities.
“Of course there will be another boom and bust… but as Mark Twain is thought to have said ‘history doesn’t repeat, but it rhymes’ so the specifics will be different next time,” he said.

Property
North platform adds household reporting feature to boost adviser efficiency
AMP's North platform has launched consolidated household reporting across multiple client accounts, helping financial advisers streamline their client review processes. Read more

Property
What Adds The Most Value To Properties?
Wondering how to up the value of your property? Properties are worth a lot of money in general, but there’s always a way to maximise value. The good news is that most of the things you can do to ...Read more

Property
Centuria reports strong growth in alternative real estate sectors for FY24
Centuria Capital Group has reported significant growth in alternative real estate sectors for the 2024 financial year, driving stable performance and increased guidance for FY25. Read more

Property
How to leverage equity in your home for investment or renovation
Home equity, the value of your property minus any debts owed, is a powerful financial resource many homeowners in Australia can utilize to further their financial goals. Whether you're looking to ...Read more

Property
Exploring REITs: Real estate investment without buying property
Real Estate Investment Trusts (REITs) offer a compelling investment alternative for those interested in the real estate market but may not want to endure the complexities and capital requirements of ...Read more

Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more

Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more

Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more

Property
North platform adds household reporting feature to boost adviser efficiency
AMP's North platform has launched consolidated household reporting across multiple client accounts, helping financial advisers streamline their client review processes. Read more

Property
What Adds The Most Value To Properties?
Wondering how to up the value of your property? Properties are worth a lot of money in general, but there’s always a way to maximise value. The good news is that most of the things you can do to ...Read more

Property
Centuria reports strong growth in alternative real estate sectors for FY24
Centuria Capital Group has reported significant growth in alternative real estate sectors for the 2024 financial year, driving stable performance and increased guidance for FY25. Read more

Property
How to leverage equity in your home for investment or renovation
Home equity, the value of your property minus any debts owed, is a powerful financial resource many homeowners in Australia can utilize to further their financial goals. Whether you're looking to ...Read more

Property
Exploring REITs: Real estate investment without buying property
Real Estate Investment Trusts (REITs) offer a compelling investment alternative for those interested in the real estate market but may not want to endure the complexities and capital requirements of ...Read more

Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more

Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more

Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more