Wednesday, March 25, 2009

Right Time To Invest?

The outlook of the investment industry remains uncertain amid continued risk aversion, volatility and flickering signs of hope in capital markets, industry players said.

Sales may improve this year as equity markets locally and abroad were starting to look attractive due to cheap valuations. Although sales had started to slowly pick up since early this year, it may be impacted severely if the market continues to fall to lower levels.

According to Federation of Malaysian Unit Trust Managers, the number of unit trust agents exiting the industry last year is less than 10%. The decline was much lower compared with other agency-related industries. Most consultants are in for the long haul and understand that the recent market volatility is temporary. Despite the poor investor sentiment, there had not been any panic selling of unit trusts.

Now is the right time to invest. In the current market where uncertainty prevailed, it was best to accumulate assets using the method of dollar-cost averaging, whereby a fixed amount of investment is regularly made regardless of how the market is performing.

As for investors who prefer to invest in one lump sum, they can invest based on the principle of asset allocation. Their money is divided into three portions, namely aggressive or equity-based funds, moderate-risk funds or lower-risk segments such as bonds or money market funds.

Last week, Amanah Saham Nasional Bhd (ASN) announced an income distribution of 6.25 sen per unit for Amanah Saham Malaysia unit holders. The dividend announcement was for the financial year ending March 31, 2009 (FY09). The dividend was the lowest ever declared by ASN. However it is more attractive than Fixed Deposit rate of 2%.

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