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While travelling across South East Asia on my holidays, I came across a fascinating behavioural cycle in people – in that, other people’s behaviour matters. People are encouraged to do something or commit to a plan if they know others are as well. This is true even when making a financial decision. 

I was discussing mutual funds in Malaysia with a few people – it is interesting how the investment concept is limited to what they have seen their parents and grandparents invested in. More often than not, this means investing in term deposits as you are guaranteed not to lose your money, unless of course a situation such as a bank run was to occur. The word mutual funds were often greeted with a big no from most people I spoke to as they deem that to be very risky and only for those who are rich. 

However, many also ignore the fact that investing purely in cash for extended periods may mean that your value of funds is eroded by inflation (when inflation is higher than the rate of return of Term Deposits). 

It is also interesting that the concept of risk doesn’t apply to property for many. The view is generally that property is a safe investment – when in reality, it isn’t entirely safe.

The discussion then shifts to risk appetite. Many ignore the liquidity aspect of an investment as well as the overall cost associated with an investment. The belief that property price crashes never happen is also scarily common, and that has fuelled the big price jump for the last few years where the fear-of-missing-out (FOMO) took over. The traditional view that you have not made it till you own your property is also a contributing factor. It’s interesting how many can’t seem to understand that the investment market (shares and funds) are also investment assets just like property is. 

Another concept that many are reluctant to talk about is insurance. It is interesting how many are wary of risky assets such as shares but willing to take a huge risk regarding insurance cover by not obtaining adequate levels of protection. For example, someone may be very reluctant to invest in a stock market over the possibility of a flash crash but isn’t concerned about their finances should they have a prolonged illness or be bed-ridden. 

It all comes down to education – risky assets such as shares generate growth, which is needed to ensure you have a strong retirement plan in place as well as to allow you to diversify your wealth further and build a strong foundation for you and your family. Similarly, insurance is essential to provide you with a sense of protection. 

If you are bed-ridden with an illness, the last thing you would want to think is about your finances and how you are going to pay the bills, ensure there is a roof above your head and food on the table. This is where insurance cover is essential in providing you with support so you can focus on recovering and being there for your family again. 

Overall, getting a full financial plan is essential. You should take your time and understand your finances, the direction you are heading in, the options available and discuss with a professional how-to best structure your assets for your future. If you don’t invest in your future, no one else will.

Please contact us for a one-hour complimentary financial review – mention that you saw us on Star Observer and we will offer you a concessional review which will be discounted at one-hour of our time.

Karam Singh, Authorised Representative of Madison Financial Group Pty Ltd ABN 36 002 459 001 AFSL no. 246679.

He can be reached at or 1300 193 136.

This information is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. We strongly suggest that you seek professional financial advice before action. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc. as at the date of issue.