Wealth Management: Top five investment tips for the new financial year

 

In the first of our Wealth Management blog series, Laurence Kelly, financial planning director at Moore and Smalley, covers top five investment tips for the new financial year.

 

1. Corporate bonds have the advantage of offering fixed income robustness with equity-like performance. Many investors who held corporate bonds in 2012 saw healthy returns and this trend is likely to continue in 2013 as companies seek to avoid substantial new borrowing and official intervention underpins government bond markets.

 

2. Equities in global emerging markets have not been cheaper for 12 years. There is greater growth potential in emerging markets than developed economies, although emerging markets will remain volatile, and growth may slow down as the year progresses. Meanwhile, European equities are very competitive due to ongoing eurozone negativity which has resulted in the widest valuation gap between European global businesses and their US counterparts in a decade.

 

3. Property remains a popular an investment class after making an impressive recovery in numerous locations around the world last year. Although property-based investment may have a quieter year in 2013, the broader environment of steady growth will benefit property assets. Real Estate Investment Trusts (REITs) represent an effective vehicle for property investments.

 

4. Diversifying your investment portfolio is still the most effective way of reducing risk, although diversifying too much can mean sacrificing lucrative returns. A reasonable spread across your investment portfolio removes turbulence and generally results in more consistent returns. Professional advice is always recommended to achieve a balance that suits your appetite to risk.

 

5. On an investment management level, investors should avoid attempts to micro-manage the timing of their entry in and out of different markets or regions. If it was possible to do this accurately and consistently, there would be no need for these tips!