Sunny side up for 2013

Sunny side up for 2013
16 January 2013

I AM entering 2013 in an optimistic, yet still cautious, mood! The Organisation for Economic Co-operation and Development’s (OECD) lead indicator for global growth is positive, housing and labour market data from the US continues to come in strong with more recent Chinese data also surprisingly positive.

Even Dubai seems to be experiencing somewhat of a renaissance - yet the renaissance masks continuing problems.

During the property frenzy, developers piled up debt as if there were no tomorrow. Those involved in the market now would hope that lessons have been learnt as we move forward towards more sustainable, steady growth.

'Fixer-uppers' and the future

In the US just recently when faced with the potentially catastrophic "fiscal cliff", the law-makers finally swung into action and rode to the rescue; an hour or two after the midnight end-of-year deadline, the Senate finally passed legislation designed to avert the "fiscal cliff" disaster.

Well, sort of. Following the new global approach to solving problems, what the US Senate really did was 'kick the can down the road'. One has to wonder whether this has been a global economic tactic for many countries over the past couple of years, especially in the Eurozone.

At some point in the not too distant future we will be in the recovery phase but there are sure to be a few more bumps along the way with issues in the US and Eurozone still not resolved.

So if, like me, you are positive about the future but tread on the cautious side, it’s probably best to incorporate this way of thinking when building or re-aligning your portfolio.

Picking the path for you

If you’re not quite sure whether to invest at all, why not invest part of the cash you have and keep the rest for later when you gain more experience? Or maybe look for a lower-risk alternative. For example, instead of making investment choices yourself, look for a low-cost collective fund such as an investment or unit trust. Dealing with one diversified fund is easier than attempting to build your own portfolio.

If you think the time is right for venturing outside of cash, you may want to try one of the following:

A bond fund – your money goes into fixed-interest securities tied either to governments or companies.

A distribution fund – the type of fund focuses on a mix of lower-risk shares, bonds, cash and property. Some firms now offer a similar risk/return deal with absolute return funds.

A no-lose fund – you put your money in a special fund, usually for 5 years. At the end of the specified time, you either get your money back without any deduction or, if the index has risen, your original money enhanced by the percentage rise. These types of fund can have masses of small print so be careful you know what you’re getting into.

A tracker fund – the type of fund follows a stock-market index such as the FTSE 100 up and down. This option is a good idea if you want to be in shares but have no idea which ones to buy or which fund manager to back, but you still have the risk of playing the stock market.

For those of you who are seriously scared, your motto should be ‘safety first’! Here are a few suggestions…

If the thought of losing your money gives you the creeps, then don’t invest in anything that could cause you grief or sleepless nights. There’s no point worrying yourself sick!

Don’t just go for the savings deal your bank offers. Instead, shop around for the best deal using the Internet and speak with your financial adviser.

Take advantage of the fact that you are an expat, do not pay any tax and have access to offshore investment products that build up allowances from the time you invest. Research the fact that there are significant advantages to investing, holding assets, doing business or residing offshore. It can give you broader access to global markets and, therefore, yield more investment opportunities. Your assets can be protected from unsubstantiated lawsuits and unjustified claims. You can enjoy privacy, personal security and, of course, there are many possibilities to reduce taxes legally.

HOW do you feel moving into 2013? Will this be the year you invest? Talk to cashy below!


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