China should be only one part of your portfolio

Emerging markets have done well, as have Brazil, Russia, India and China funds and you should consider investing in them. (SUPPLIED)

Today's question is from a 31-year-old Dubai-based Irish real estate agent, Alan Frew: "There has been much talk about the strong performance of the Chinese market in 2009 and signs of continued growth. As a result, I have been thinking of investing heavily in China. Do you have any tips?"


China certainly has done relatively well over the past few years compared to other markets and is widely tipped to be the country that could help bring the world out of recession.

Many analysts are recommending investment in China but I would urge a degree of caution. Will the bubble burst? No one knows for sure, but I would suggest China forms only a part of your investment portfolio. Diversification is key. Yes China has done well, but there is no guarantee that past performance will continue. Emerging markets have done well, as have Brazil, Russia, India and China (Bric) funds and you should consider investing in a basket of such countries.

You may also wish to consider investing in other continents and asset classes, increasing your diversification in the process. As you are relatively young you may wish to invest for the long term while also leaving some spare cash for emergencies.

I also note you are in real estate and therefore are likely to receive a variable income from a commission-based job.

Therefore, I would recommend that, if you are considering regular savings, you pitch your premium level at something you can afford each month – even during a bad month. Of course, prioritising your needs and matching these effectively against your income should be done with the help of a professional adviser.


- Independent Financial Advisor Gavin Smith analyses readers' portfolio for Emirates Business. He is Area Manager for consultants PIC, a member of the deVere Group of companies. Write to him at money@business24-7.ae

 

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