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Crisis or Opportunity

Last week, a client asked me this, "I heard there is a financial crisis in every 10 years, do you think it is good time to top up or to buy more unit trust funds right now?"
What do you think?

Crisis? or Opportunity?Invest more? Sell off all? Or to hold back and wait?


I answered my client, "Yes, everybody is talking about the mega financial crisis in every 10 years circle, but the problem is nobody knows the exact date of this crisis."



 I continued, "If the crisis happened in last week, local stock market slump down to 20% in a week, your unit trust portfolio dropped 15%... You know that the unit trust portfolio is for your retirement plan in the next 15 years, and the money you putting in unit trust funds is 40% of your the total cash in your hand. What would you do at this point of time?"
"To sell off all for cutting lost? To top up more while the unit price is low or to hold back to wait...?"

"Do you see this is an crisis or opportunity?"

 The client think for few seconds and answered me, "If there is the case, then I don't think selling off is a wise decision since I have the holding power."

"I should be in the upper position to choose the unit trust funds with attractive unit price."
"Hey, are you going to inform me top up more when this opportunity arrive?"

 From the above scenario, we can see how an investor's emotion turn around when they see a financial crisis and investment opportunity in the same time.

 As an investor, always ask yourself these questions...

1. Is this crisis and an opportunity for me?
2. What is my financial objective for my current portfolio?
3. Do I have the holding power for next 3 to 5 years?
4. Do I have extra money to top up or buy more if the price keep dropping down (cheap)?
5. What is the advice from my consultant?
I would say, every down turn in stock market will be a bounce back in the next few years, even some within few months.
In 2008 US Sub Prime financial crisis caused the global crisis, the expert said "We are expecting the L shape in the graph for the next 3 to 5 years and don't expect the V shape..."
"At the moment, we don't expect good news can bring up the market but a single bad news will drag down the market more.."

History tell us, there is no L shape in the market. A healthy market are supported by demand and supply, or selling and buying. It will only going up or down, I would say W shape might be possible compare to L shape.

Which means, opportunity is every where and is depend on how you look at it?

 If you go for the research financial crisis, then you would surprise that there were so many crisis actually happened in the past 10 years.

(source : wikipedia)

Have you ever make any decision on your unit trust fund investment for the past 10 years?
The answer is no.
Why you wanna invest your money in unit trust funds?
Because you let the fund managers to manage the fund in the professional way, you don't want to worry the market and let the fund managers to run the show.
Holding Power is the key.

 Remember, investing in unit trust is different to investing in stock market or currency market.
It's totally different game rule.

If you do your research, the past performance in local (Malaysia) unit trust funds, most of the funds will bounce back after the down trend in stock market.


Good luck and talk to you UTC (unit trust consultant) to get more details before you make any unit trust investment.












Disclaimer : The contents of this article is based on an experience shared by an UTC. It does not constitute recommendation to buy or sell unit trust funds.
Investors are advised to go back to individual UTC or mutual fund company to get more information about the risk & return on the unit trust funds.
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