advisors on personal finance and investing for Bermuda residents.

Government's recent lifting of the ten percent Foreign Currency Purchase Tax enables every adult to convert BD$25,000 per annum into a foreign currency for investment purposes. The Royal Gazette's advertising department must have been working overtime since the Budget to cope with those wishing to tout the benefits of investing in everything from mortgages to derivatives. But before you lift that deposit, sell your local shares, and unstuff the mattress, take a few moments to decide whether or not the dangerous world of investing is really for you.

The maxim "Invest in haste, repent at leisure'' is a good place to start. Any opportunity worth taking is still going to be around tomorrow. So don't feel pressured to sign anything immediately or throw all your money at the market at once. Ideally we want to invest when prices are low and sell when they are high. The average investor, however, does the opposite -- investing when the media are reporting that markets are hitting new highs, in the belief that it can only continue, and selling after a big fall, blaming bad luck and resolving never to get sucked in again. The best way to avoid this is to construct your portfolio over several months, exploiting the benefits of a phenonmen called dollar cost averaging. This says that, on average, you will receive more for your money by investing in stages rather than all at one time. The mathematics of it are unimportant -- what is important is that it works.

Do you like to take risks? If not, you might as well turn to Doonesbury right now because investing involves taking risks. In general, risk and reward are positively correlated. The greater the risk you take, the more your reward should be. Warrant funds are high risk. Ten thousand dollars in an Asian warrant fund grew to $43,300 last year. Ten thousand dollars in a Japanese warrant fund shrank to $4,800 during 1991, then to $1,500 in 1992. We would all like to see our money grow four-fold, but could your bear to watch it lose 85 percent? Know the level of risk with which you would be happy and invest accordingly.

Risk can be reduced through diversification. Investing via mutual funds gives you ready-made professionally managed portfolio. You can select a general fund to form the core of your portfolio, adding specialist funds (such as those that invest in emerging markets or smaller companies) to tailor it as you see fit. A typical fund may invest in 50 or 100 stocks -- more than you could possibly cover by yourself.

Risk can also be reduced by investing for the long term. Suppose your mutual fund investment gives you an average return of 10 percent per annum. If you invest $10,000 now it would be worth $11,000 in one year. Due to compounding (earning interest on the interest) it would be worth $26,000 after ten years.

Compare that to a bank deposit earning 6 percent which is worth $18,000 after ten years. In some years the mutual fund investment may go down in value, unlike a bank deposit, but over the long term it should easily outperform other investments.

Finally, do yourself a favour by seeking advice, preferably from a member of the Bermuda Association of Securities Dealers (BASD). Some advisors charge by the hour, others get reimbursed by the mutual fund companies. Either way you should end up recouping the costs with a better-performing portfolio.

Andrew R. Doble is President of Ardent Investment Management Limited, a founder member of BASD.