Decide how aggressive you want to be

Take a look at what the rich do with their money and you might get some ideas on how to answer the above question.

The Nation asked for the opinions of four wealth managers, who manage the riches of the very affluent in Thailand, on what they are doing with their portfolios right now and what they recommend their customers should do.

First of fall, they recommended customers not to panic despite the abruptly changing situation.

While some play safe by moving their wealth to more liquid assets, others start picking up cheap stocks. For those of a conservative nature the recommendation is to lock up their returns on government bonds, particular those with a two-year maturity.

Here are the wealth managers' comments.

Metha Pingsuthiwong

Executive vice president,

Tisco Bank

Low-risk takers are recommended to move money into long-term deposits such as six-month or one-year accounts. Those who are a bit more sophisticated should move to two-year government bonds with average returns of 4.7 per cent per annum, up from around 3 per cent previously. Government bonds with longer maturity are not recommended, as it is difficult to foresee the interest-rate trend beyond two years.

For those who can take some risk, they recommendation is to put 80 per cent in government bonds and 20 per cent in good stocks. This model of investment will protect their principal. Even with some downside of stocks from now on, they won't take a loss. They would get around 3.7 to 4.7 per cent as an overall return.

For risk-takers, the time is right to collect good stocks whose prices have fallen below their fundamental level. This is for one to two years of investment - not a three-month strategy. Once the political tensions subside, the stock index should bounce back strongly.

For more sophisticated customers, funds that invest in gold are still a good inflation-hedge investment, particularly when the baht tends to depreciate.

Noppawan Jermhansa

Senior vice president and

manager of Wealth Management Department, Bank of Ayudhya

Foreign investment, commodities and property seem to offer good diversification choices but the wealthy are quite cautious with all the information at hand. We start to see customers increase liquidity in their portfolio by holding more short-term fixed-income instruments like Treasury bills, short-term deposits or short-term mutual funds with maturity of less than one year. We have seen a strong response to our newly launched two-month bill-of-exchange programme at 3.1 per cent per annum from wealthy customers - both metropolitan and upcountry.

However, investors do not totally ignore investments longer than one year but are very selective about those that offer attractive returns. This is evidenced in our recent oversubscribed two- and three-year debenture programme of more than Bt21 billion at rates of 4.25 per cent and 4.5 per cent, respectively.

Most of the time, there is no single formula that can be applied to everyone, but consumers need to first understand how are they affected by the situations, and they need to decide how to manage their financial affairs in the short term and the long term. We do encourage consumers to carefully review their financial planning and maintain a high degree of discipline to protect their wealth.

Tawit Thanachanan

First senior vice president, Kasikornbank

During market volatility, investors should:

1. Raise some cash because when opportunity comes they will have the cash to invest, and when the market goes down they will be partially shielded against volatility.

2. Review their current asset allocation to see whether it suits the present situation. For example, during high-inflation periods, the holding of shares of companies in energy-sensitive industries should be reduced or avoided because the margin will definitely reduce.

3. Look for the medium- and long-term trends and keep the investment that still suits those trends, as even the short-term prices may go down. This is recommended especially for those who are not close to the market and cannot react quickly.

4. Seek advice from experts. This may mean that investors have to go beyond traditional investments such as commodities, derivatives or doing some hedging of positions.

5. Don't panic. Investors have to try to analyse the situation and decide whether the situation will deteriorate or not. If so, the reaction may have to be quick. If not, stay calm.

Pavin Rodloytuk

Retail banking director, Citibank

As long as we feel nervous and don't know what to do with our idle cash, we will tend to be more affected by inflation. Why is this the case? Given the current financial environment, there are no banks in Thailand that are paying higher deposit rates than the current "headline" inflation. The longer you are nervous, the longer you will be the victim of the "negative real interest rate".

Investors need to remember that prudent investing is for the long term, and they need to stay the course even during periods of market volatility. Some people may be paying too much attention to the 7.6-per-cent "headline" inflation recorded in May, but it makes more sense to look at the average inflation rate for the year rather than the peak.

If you only remember the highest levels then you will tend to aim for investments that will yield a higher return rate than the "peak" inflation level. As a result, you may get too aggressive with your investment options, as you want to beat that "peak" level. When you know how much you need to aim for in terms of the return/yield you need from your investment, then talk about what you can invest.