Help, I m Rich!: Your Compass to a Value-Adding Private Banking Experience

Chapter 3 An Investment Approach That Suits You

Before you invest, it is important to ensure that you have a good understanding of your personal situation:

• Your investment goals and objectives
• Your total wealth and (future) income
• Your family situation/stage of life
• Your investment knowledge and experience
• Your risk tolerance
• Your ability to take risk
• Your investment time horizon
• Your liquidity and cash requirements

Only once you have this picture clear is it possible to determine which risk–return profile—from conservative to aggressive—suits you.

We succeeded. We convinced Mr. Jones to invest. He contacted two reputable banks asking whether and how they can help him to invest his money in such a way that he can expect at least a 5.3 percent return. Both banks act fast and have a client relationship manager call Mr. Jones.

Message Delivered during Telephone Conversation with Relationship Manager from Bank 1

Dear Mr. Jones,

Many thanks for your interest in our bank. We are more than happy to help you achieve your target, which should not be too difficult. We have some great product specialists who will be able to give you top-notch investment ideas, so that you may rest assured that you meet your targets. At this moment, for example, we like an ETF on the NASDAQ Index very much—which is valued way too low at present—and we are happy to leverage this ETF up to 60 percent. As you are probably aware, leverage means that you can take money from the bank to make it work ...