How big is your list?

September 29, 2015

If you are like most investors now and ‘sitting on your hands’ until there’s an unambiguous sign of restored global confidence, here is something you can work on in the meantime Broaden the list of things you are prepared to invest in.

We have listened to clients say “I don’t want any International shares, your money is too far away for my liking” (or “you can’t trust those overseas types”). Also, back in the heady days of booming residential property, we wish we had a dollar for every person who said to us, “Property is the only thing worth investing in; I need to see and feel what I’ve bought”.

The problem is that these investors are forever stuck with limited options. If this single investment of choice has 5yrs in the wilderness (like now), they get no return on their money.

All asset classes are sometimes expensive and sometimes great value.  You make the money when you buy good assets cheaply.  If there is only one thing they are happy to have money in, and it happens to be expensive right now, they may make a bad buying choice. But when it gets cheap, chances are their current investment in that same asset type has lost value, leaving them in a poor position to take advantage.

So something you can do is to explore ways to broaden the list of assets you are comfortable investing in. The world’s best investors are just as happy owning Pork Bellies and Orange juice (got the makings of a recipe there) as they are buying houses, as long as they know they got in cheaply.

Examples - If you are only comfortable buying residential property, perhaps take this time to learn about how commercial property works.  International Shares have performed terribly over the last 10yrs as the rising Aussie dollar created a huge headwind.  But 10yrs is a long time in the wilderness for such a key asset class (only 4% of the Shares available globally are in Australia).  This may be an opportunity to buy cheap, but only if it already sits comfortably on your list of investment possibilities. 

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