Hi,
That's an interesting point you bring up there, "risk", as investors we always need to evaluate the risks, and determine how to manage it.
If you consider;
- superannuation (managed funds)
- direct share trading
- options
- buy/hold property
- renovation
- off the plan
- development
- wraps
they all have their risks, with wraps, when a wrapper UNDERSTANDS the people they are dealing with, that immediately changes the nature of risk. In theory if they know the risks, they can start to plan effectively to neutralise it. And that's the trick with wraps, learning to manage the risks.
Why is there a perception that wraps are hard?, because of the risks. Once you realise that with planning the risks can be neutralised, then its not so daunting. But it takes time, I'm still learning after 2 years, but Rick Otton makes it look easy, but then his had over 10 years experience
What about our developer forumites?, they too would be learning risk management as they progress too.
And what about the wrappees?, well even the Goverment didn't get it right the first time (Home Fund) nor is the Dept of Housing a smooth operation without risks.
But wraps aren't just marketed towards to low end of the market, wraps are for anyone who are unable to obtain tradional forms of finance. Consider a business owner, cashflow is good, but company is new, wants a house for new family decides on wrap. Then fire from next door warehouse damages their own area, insurance doesn't cover situation properly, struggles to maintain payments, informs wrapper that sadly they have to let the property go and go back to renting while they sort themselves out. Through bad luck successful businessman fails on wrap.
The point here, is not risky, is a higher level of risk.
Michael G
