Investors Go For Gold

Posted on: 28 August 2008 by Gareth Hargreaves

As eyes turn to the East in the wake of the Olympics, Graham Kerner discusses long-term investment and China's economy.


With China hosting this summer's Olympic Games in Beijing, all eyes have been turning to the East and upon a nation which is rapidly increasing its influence on global economic affairs.

Indeed, the eyes of investors have been turning East for some time as the emerging economies of China, Russia and India progressively make their mark. A recent study by a US research organisation predicted that China's economy will overtake that of the United States by 2035 and be twice its size by the middle of the century,

The report says that China's economic performance is not a flash in the pan, with its growth this decade averaging more than 10 percent a year and remaining strong in 2008. Economist Albert Keidel of the Carnegie Endowment for International Peace also predicts that its financial clout could lead to international institutions gravitating towards China in the future, with various headquarters potentially shifting to Beijing and Shanghai.

So in the wake of the Chinese hosting the Olympics for the first time, these are exciting times for the world's most populous country as its global economic influence broadens and looks set to expand significantly in the long-term.

The long-term is a consideration which should always be the primary objective for any person looking to build an investment portfolio. This is because the short-term is so unpredictable, and history has shown that market falls are almost always followed by recoveries.

Difficult though it is, investors should try not to lose sleep over short-term movements in the markets. The price of an investment matters only on two occasions - the day you buy it and the day you sell it. So investors should always try to regard their investments as long-term commitments and try not to be disconcerted by any short-term fluctuations.

But no one has a crystal ball and not even the best investment managers can tell when markets will move up or down, or say with any certainty when is the best time to invest in the market . What good managers can do, though, is distinguish between companies that are better managed than others, and identify sectors that can be expected to perform better according to trends.

Although a downturn in the markets will mean a period of more conservative growth, it should also be seen as an ideal opportunity to invest. The investor should always be thinking of diversifying, and stocks and shares are only one type of investment - others include fixed interest, property and cash.

Regular saving as part of a long-term investment strategy offers a flexible, affordable solution for many people, and it is the time in the market that is important, rather than timing the market. Running an investment portfolio on the basis of getting your timing right rarely works. The most important thing is to get your money into funds that will be managed for your benefit over the longer term - and then try to forget about them.

Also, by keeping wealth in more liquid assets such as cash, deposits or short-term Government securities, investors should not be forced into cashing in investments at what might be an unfavourable time.

A reputable, specialist wealth manager understands the importance of having investment solutions that will stand up to the task, underpinned by independent investment managers who are carefully selected, regularly monitored and, if necessary, changed.

Spread over the long-term - and it is the long-term that all of us must plan for - will make the difference to allow people financial independence in their retirement. As life expectancy increases, the amount of assets required to support a retirement period of typically 30 years or more is greater than most people appreciate, so the importance of investing sensibly and early, with the right investment portfolio, is essential.

With longevity going the way it is, there is every chance you will see the predicted ascendancy of the Chinese to the world's premier economic force. But then again, no one has a crystal ball.

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