When you map out a particular investment strategy you do so assuming that the current laws and regulations won't change.

But what if they do? Most people invest their money to take advantage of current tax laws and rulings at the time, but there is always a risk that these rules could change. This is especially important in the tax aspects of superannuation and social security where the government has made many major changes over the years.

The best way you can handle this is to simply understand that changes are possible, consult a financial planner, and make sure that you will not be locked into an unsatisfactory strategy should the tax laws change. A financial planner can help you understand legislative risks of a particular strategy.

Gearing is borrowing to invest, or investing in leveraged assets such as endowment warrants or options. It can dramatically change the level of risk in an investment strategy.

You should ask your financial planner to full explain how any gearing or leverage will change the risks of your investment portfolio and, in particular, what is the worst case scenario if things do not work out as expected.

One of the first questions you should ask a financial planner is whether they are a member of the Financial Planning Association (FPA). The FPA represents specialist, professional financial planners advisers who are qualified and experienced to help you manage your finances properly and realise your life goals. Reproduced with the kind permission of FPA and Macquarie Investment Management Limited

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