Yesterday I had a look at the markets before settling to write this. The graphs were aligned. They all point down. Today they're up.
2016 has been a remarkable year of volatility and uncertainty in the markets and for investors. It's confusing, scary and you could lose – a lot.
This is how people who invest for a living feel. The likes of you and me – we'd do good to stand on the sidelines and just watch.
But there are opportunities to be had. And so in the interest of us remaining sane, and our savings safe, I am sharing simple, obvious things to look out for when making investment decisions. They're the things that mega-corporations are doing increasingly, to lessen various risks – they're packaging it as lessons learnt from the credit crunch – but in reality, it's back to basics common sense.
Your three words to remember are: Liquidity. Resilience. Fees.
Look for liquidity with access to capital at short notice. You don't want to be tied in for years, or have to pay hefty penalties if you want out.
Invest in things that are resilient to economic downturns. Things that people need or do regardless of how much money they have in the bank.
Fees fees fees. Dissect. Ask. Check. Fees eat away at profit. Always, always, always look at returns after fees.
These were the overarching fundamental messages at an investor gathering held last week in Abu Dhabi. It's not the sort that you or I would attend – the audience was made up of the wealthiest entities and individuals from across the region. There were hundreds of billions of dollars in that room.
It goes without saying that those making the statements – for liquidity, resilience and no or low fees – were the very people selling the "right" products for these uncertain times. They might deal in billions of dollars – but the principles apply to us all. Especially now. If it's not a man-made landslide – with populist politics winning votes around the world – then it's natural disasters like the earthquake in New Zealand, the biggest to hit the country since 1855.
Little wonder we're jittery and confused. No wonder we need to go back to basics. But there's an art in stating the obvious, and a science in living by it. Let's take each point in turn:
• Liquidity and access to your cash.
If access depends on your asset being sold on, think carefully before you do this. I'll give you an example: there are very interesting forest direct investments out there. You don't buy land, you buy the produce – the tree or the fruit it grows. You buy future crops. Above average dividends are enticing. But if you want out, you're told a buyer must be found who wants to take over your crop. In other words, the capital you put in is not accessible to you as and when you want it. Or it could be that you buy into a fund where your money is locked up for a year or three with hefty penalties for exiting.
Ideally look for opportunities that allow you returns, but with access to your cash. If you must lock it in, don't go for years at this point.
• So what can you invest in?
Well, some investment firms look carefully for sectors that will stay in the money no matter what the economic climate does. It's the sort of stuff that we all do, day in day out, or periodically. Like food. Or maintaining where we live – electrics and air conditioning always need to work. It's things like umbrellas – who knew that the average number of umbrellas people own worldwide is 2.4 – the Japanese are especially fond of theirs, owning at least three on average. And with men losing at least five umbrellas over their lifetime according to a survey, what's not to like about investing in umbrellas?
•Fees. You know what you need to do.
So while we all take stock and digest the new world we live in – Marine Le Pen, the president of the Front National in France, said it's not the end of the world, it's the end of a world – why don't you exercise a personal isolationist policy and protect your finances with the three points at the top as your guide, then no matter what the markets do, you're smiling.
Nima Abu Wardeh describes herself using three words: Person. Parent. Pupil. Each day she works out which one gets priority, sharing her journey on finding-nima.com
