Investment Strategies

Investment is a vehicle for you to gain wealth. If you put your money in fixed deposit with annual interest 2%, the 2% that you earn is the wealth. If you do not invest it, then you’ll not earn the wealth. However, investment has its risk as well. During economic downturn, the values of shares will drop and you might suffer loss from your investment. Therefore, it is essential for you to decide your investment strategies.

In this post, I’ll share the investment strategies which are suggested by Alan Inn, the co-head of CIMB Private Banking. Although Mr. Alan’s suggestion is targeting on the institutional investors, I do think that individual investors can adopt the strategies as well. There are 3 recommended investment strategies. The first strategy is the investors should pace their investment in equities. Technical price charts suggest that in the short term, equities markets are headed for some corrections. This is because major markets are technically overbought temporarily. In order to understand this, you need to understand the theory of demand and supply. If the demand is high and the supply is low, the values of the things will increase. So assuming Share A is demanded by many investors but the supply is less, the price of share A will increase. However, there is no such thing as the share price will keep increasing infinitely. Once it reaches its peak, then it will come down. Therefore, the investors should pace your equities investments along with possible corrections to minimize the risk.

The second strategy is do not overlook China and Asian equities. According to some of the economists, China is expected to take the lead with US to lead all countries in the world to the road of recovery. With China’s strong fiscal-driven growth, rapid expansion of bank credit, low level of government debt, high household and corporate savings and the government’s willingness to adopt aggressive stimulus policy, these are the evidences that the China will be the first few countries to recover from global economy. Cooperation between China with other Asian’s countries, stronger growth rates and healthier financial position are the factors that Asian equities are expected to outperform the developed world.

Diversify portfolio via superior actively managed funds is the third strategy suggested by him. The investors are advised to diversify the portfolio and do not put all eggs in one basket. Once the basket drops, all eggs will be broken. Therefore, the investors can invest in conservative investment partially, moderate investment partially and aggressive investment partially. This will help to reduce the risks that are face by the investors.



Reference
Still not too late
Second half 2009 market analysis and investing ideas