Guru Speak

As an investor myself I believe that investors can take advantage of the current market situation to make good investments.

Here I will share some of the investment principles which I have been practicing as part of my investment and wealthcreation strategy.

1. Stay focused. Markets move in cycles. The ups and downs are part and parcel of investing. Never believe you can outsmart the market and guess where the markets are heading. This only makes for speculation and gambling. Historical data has shown time and time again that markets always recover after a downturn. It is extremely difficult to time the market as one often ends up selling too early, or worse, too late. Investors need to set goals and remain focused on these longterm goals through the long haul, often resisting the temptation to follow what everyone else is doing when anxiety at times begins to cloud one's judgement.

2. Stay diversified. The more volatile the market, the more important it is for one's investments to be spread out over different assets. A diversified portfolio of investments will allow one to better weather the volatility of the market and by adopting such an approach it will prevent one from overdependence on any single asset.

3. Think wisely. Investments need not necessarily be bigticket items. By investing equal amounts at regular intervals, you are dollar cost averaging. Dollar cost averaging is an effective investment strategy whereby your regular investment purchases more shares/units when prices are down and less when prices move up. This method of investing smoothes out the ups and downs of the markets in any market situation.

During periods of uncertainty, make sure to look beyond the frontpage headlines, for even if there are more dips in the market to come, there will also be a number of opportunities to look for bargains. Most often, bear markets provide the investor with an opportunity to pick up quality blue chip stocks that have suffered as a consequence of the general market. One will never be able to predict when the market will bottom out but if one invests in quality companies, with strong cash flow and sound fundamentals, you will come out ahead more often than not in the long run.

If, like most of us, you don't know enough and don't have the time to constantly manage your investment portfolio, leave it to the professionals - the fund managers. For the average man in the street, the benefit of investing in managed funds is the experience the fund managers bring to the table that can help an investor eliminate the timeconsuming tasks of researching and sourcing information on his own.

4. Seek financial advice. In this current market uncertainty, it is advisable to discuss your financial situation and goals with a good financial adviser before making impulsive decisions that may hinder your ability to create a good investment portfolio over the long term.

5. Be informed. Do not be intimidated by meltdowns in the markets, which may throw you off course. If you have a structured and organised plan for your savings and investments, stay on track. For those who have yet to begin investing, the current market situation is an ideal opportunity to get started. Again, talk to a professional, open an account and begin contributing regularly in either monthly or quarterly intervals.