A few risks could pay dividends for investors in long run

We do not want to take any risks when investing money if we can help it. Yet not taking any risks - which essentially means putting all of your money into fixed deposits - can also be risky, because the threat of inflation eating up all of your money is very real at present.

Therefore, let us go back to basics and revisit the truths, so that we can build on these and plan a good course of action while moving forward.

The following are some investment rules that may provide a guide to investors.

Time, and not timing, is the key. None of us can accurately read the market all of the time. Over time, however, our investments should grow at a respectable rate, so it is always advisable to start investing early.

Diversify. Putting all of your money into a fund that is concentrated in a particular sector or focused on a single country, for instance, may not be the ideal way to diversify your investments. It is always advisable to have some investment in equities, bonds and the money market, in order to diversify your risks. Be patient, review your portfolio and work out whether you can further diversify and improve the mix.

Dollar-cost averaging. Investing regularly, say Bt5,000 a month, not only builds discipline, but also is a strategic way to invest, because you buy more shares when the cost is low. You end up with a good average cost per share over time, and it means you do not have to spend the time and effort to monitor market movements and subject yourself to investing according to market timing.

Risk profile. Investments are likely to carry risks, and it is important to understand your risk profile. So, if you experience more volatility than you expected, it is a good indication you have committed to a level of risk beyond what you can stomach. Remember that you should not have to change your investment strategy unless your goals change.

If your life remains unchanged, so should your investment plans. Stick to your plan and seek help from financial experts when in doubt.

It is important for investors to stay focused and be certain when dealing with uncertainties. History reminds us that markets tend to rebound and given enough time will bring good gains to those who wait.

Benjamin Lim is head of marketing and business development at Aberdeen Asset Management Thailand.