Long term pays best

INVESTORS have a real dilemma about how to invest. Should they stay in money market or invest either in shares directly or through unit trusts-SATRIX?

INVESTORS have a real dilemma about how to invest. Should they stay in money market or invest either in shares directly or through unit trusts-SATRIX?

Investors need to put in place a long-term investment strategy based on fundamental investing rather than make decisions based on sentiment and emotion.

Twelve months ago I advised investors to get back into the market, but stressed that funds should be phased in over four to six months. Few reluctantly heeded my advice, but the majority wanted to wait for the "mythical bell to ring" and give everyone the same opportunity to get back into the market in time for the run.

Investors waiting in money market to see an improvement before investing are more confused than before. After all, it has been emphasised that they should reinvest when things are better, but things are not better and it will still take time for that.

Economies should improve in the next 12 to 18 months . We've had a ½percent interest rate cut last week.

If you are parked in money market waiting to invest, have you missed the long-term opportunities? In the short term, possibly, because of the strong run on the market where the top 40 index is up 57percent and in which some shares have more than doubled.

But what is going to happen next is predictable. There is going to be a move into equities and the next stage will be that markets come off.

What I am going to be hearing for the tenth time in 44 years is "every time I buy, I lose". Well if you are one of those, you only have yourself to blame for trying to "time" the market.

Buy quality shares or unit trusts for the long term and do not watch these on a monthly basis. Decide on your time horizon, which should not be less than seven to 10 years.

Shares you held 12 months ago might not be the right ones to hold in future. Some previously top companies have been decimated by the global meltdown, credit crises and recession and their shares need to be exchanged for those in other quality companies.

If you need funds in the next six to 18 months, remain in money market and if you are in the market currently and you will need funds in this period, now is the time to take your profits and park your money in the money market.

lBryan Hirsch, of Bryan Hirsch Colley & Associates. Email him on bryanh@bhca.co.za or call 011-880-4448.

X