On 8 December 2009, the Australian Securities & Investment Commission (ASIC) launched the Investing between the Flags guide setting out the basic principles of investing. The guide broadly suggests that people develop and stick to a sound investment plan. It also provides case studies to illustrate how people at different life stages have different investment goals and what to consider in working towards those goals.

The guide sets out six steps to Investing between the Flags:

1. Understand some key things about yourself — think about your tolerance for risk and your goals and timeframes;
2. Understand some key things about investments — understand how different types of investments work, only invest in what you understand, be clear on the trade off between risk and return (e.g. the higher the rewards, the higher the risk);
3. Develop an investment plan — don’t put all your eggs in one basket, spread your investments between different asset classes, managers and sectors so that you don’t risk losing everything if an investment fails;
4. Decide how to invest — when it comes to investing, decide whether to take a ‘do-ityourself’ approach or get a professional to do it for you;
5. Implement the plan — do your homework, paying close attention to paperwork such as Statements of Advice and Product Disclosure Statements; and
6. Monitor your investments — rather than just adopting an “invest and forget” approach, keep track of your investments over time.

Tony D’Aloisio, ASIC’s Chairman said, “It’s just a metaphor but when you go swimming at the beach, you will reduce the risk of drowning if you swim between the flags, similarly, when you invest, you will reduce the risk of losing your money if you adopt the investing behaviours identified in this guide which has been developed over a long period of time”.

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