Buy funds which invest in several countries

September 25, 2008

A friend who panicked at the recent financial crisis in the US asked me if there was anything an investor could do to avoid losing money.

When talking about investment, there is always a risk involved. 

Having said that, one way to minimise unit trust investment risk is to look at a fund’s asset allocation by country. This means choose funds which invest in a few countries instead of just in one particular country.

This way if anything were to happen to one country, you as an investor can still rely on the other countries’ economic performances.

Another criteria to look at is the sectors the funds are invested into. Consumers is an example of a sector that is recession-proof. People would still buy consumer items regardless of the economy situation.

Let me add though the recent development in China may have given the consumer sector, at least in China, a bad reputation. They would really have to do a lot to regain consumers and investors’ trust.

All said and done, listen to your gut instinct. Your consultant can give you advice and guidelines. At the end of the day, it’s your money, it’s your decision.

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