The financial crisis has created shifts in markets across asset classes in different corners of the world, but the core principles of investment planning remain intact, says Australian financial adviser Paul Clitheroe.
'I have no evidence that anything has ever changed in 9,000 years of history with money. You can read this stuff going back to early Egypt,' Mr Clitheroe, the co-founder and executive director of ipac, said on his recent trip to Hong Kong.
'The way you create wealth is you spend less than you earn and you invest on a regular basis.'
Investors have started to re-enter the market after a historic crash last year wreaked havoc on portfolios. The fallout was perhaps most pronounced in Hong Kong, where personal wealth tends to be strongly correlated with the equity and property markets. The number of high net-worth individuals plummeted 61 per cent last year to 37,000, the sharpest drop in the world, according to the annual World Wealth Report by Merrill Lynch Global Wealth Management and Capgemini.
And investors are becoming cautious once again as valuations of stocks have crept up to the highest in about 18 months. Many have stuck to the sidelines, waiting for further validation of a turnaround in the global economy.
But Mr Clitheroe said it was still important to invest at regular intervals rather than wait for the market to bottom. Trying to time the market was a tall task given all the unforeseen factors that drive performance, and it also introduced emotional impulses to investing that add risk.
