CASH AL­WAYS JUST TEM­PO­RARY

Finweek English Edition - - Creating wealth -

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* IN HIS LATEST weekly sur­vey, Paul Hansen, di­rec­tor of re­tail in­vest­ment at Stan­lib, gives the fol­low­ing in­ter­est­ing sum­mary of the mer­its of cash in the port­fo­lio. It’s taken from a Fi­delity In­vest­ment pub­li­ca­tion: The Seven Deadly Sins of In­vest­ing.

The sev­enth sin (and to my mind the great­est one, if I may be bib­li­cal for a mo­ment) is: En­trust­ing the fu­ture to cash. While bank de­posits and money mar­kets are se­cure, this se­cu­rity comes at a price. In­fla­tion eats away at the buy­ing power of your cash.

Even though there may be rea­son to feel un­cer­tain about the cur­rent high prices of shares and also prop­erty, a per­ma­nent in­vest­ment in cash, and this in­cludes pref­er­ence shares, is never an al­ter­na­tive.

Garry Evans, who pre­dicts a 10%25% cor­rec­tion in Pan-Asia, gives the fol­low­ing sim­ple ad­vice: “Take ad­van­tage of the com­ing cor­rec­tion to buy into cycli­cal in­dus­tries when they be­come in­ex­pen­sive.”

I’m go­ing to col­lect some cash over the next few months and place my trust in the au­topi­lot in case there’s an­other shock like the one in May last year. ¤

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