Is it time to take the plunge

Published in the Herald Sun, June 2012 by Karina Barrymore

Buy in the gloom, sell in the boom - so goes the age-old golden investment rule. 

Is now the time to invest, asks Karina Barrymore

Share prices have tumbled and property prices are close behind but falling interest rates mean it is slim pickings for savings accounts.

So where do you put your money - is it gloomy enough to buy?

It takes a strong nerve to second-guess future investment markets but whichever your favourite, shares or bricks and mortar, there are discounts for the taking, say the experts.

While they might disagree on which offers the better prospects, investment experts broadly agree cash has lost its shine.

"Equity valuations are showing extreme value,'' UBS Wealth Management head of investment strategy George Boubouras says.

"A more aggressive investor will find plenty of value on a longer-term view as quality stocks are being discounted, while more conservative investors should wait, as the elevated volatility may be more than they would be comfortable with,'' Mr Boubouras says.

"I would recommend a combination of both a growth and defensive, dividend strategy.

"And with lower cash rates expected, there should be further demand for dividend-paying stocks.''

Dale Gillham, an analyst at fund manager Wealth Within, also suggests it may be time to take advantage of discounts in the market.

"While I don't want to ring a bell that alerts everyone to the market bottoming, at least short-term, the signs this week are certainly there,'' Mr Gillham says.

"It is well known the majority of investors tend to enter an asset class after it has achieved good returns

The wise investor does the opposite.

"Cash has been the best-performing asset class, which means the time to invest in cash has come and gone. Now is the time to look for the next best investment and that is shares.''

Financial adviser Glenn Fairbairn, from Hewison Private Wealth, says everyone should make their decisions based on long-term investment goals and leave the short-term market-guessing to traders.

"It is impossible to predict the low point or high point of the market as invariably you will get it wrong,'' Mr Fairbairn says.

"Long-term growth assets such as shares and property will out-perform cash and fixed interest. With interest rates at historic lows, the return on cash and fixed interest is very poor.''

Greville Pabst, chief executive at property valuation and advisory group WBP, says there are always properties available.

Mr Pabst says the question is whether buyers, not the market, are ready.

"If you have your finances in place, have a buffer to repay the loan comfortably, then it's a good time to buy,'' he says.

"It's also not only a good time in terms of the market but it's also a good time in terms of the property cycle.

"Yes, you can buy property at a discount to 12 months or 18 months ago, but what we are also seeing at auctions is things passing in. Often there is only one bidder. So this is the time when you can negotiate and get a good deal.

"People often make the mistake of waiting too long, but then they are competing with three or four people. Now it's a buyers market.''

Potential investors should seek professional advice before buying shares and/or property to determine whether such action is appropriate for their investment objectives and financial situation.

THE EXPERTS' PICKS

PROPERTY MARKET

Best buys:

Houses in the $400,000-$900,000 price range

Apartments that are in blocks of less than 20

Walking distance to village shops

Best to avoid:

High-density, high-rise apartments

Main road locations

High owners' corporation fees

Source: WBP Property Valuers

SHARE MARKET

Best sectors:

Consumer, media

Energy, mining

Telcos, infrastructure

Best shares:

Coca-Cola Amatil

Westfield

AGL Energy

Transurban

Telstra

Source: UBS