Happy New Year!
I wonder what the New Year will bring to investors in Malaysia. Q4 2006 had brought a lot of cheer to investors with the Kuala Lumpur Composite Index crossing the 1,000 points on 7 Nov 2006 and then surging to a new high of 1,096.24 at the year’s end.
Will the optimism be sustained in the new year? Will the momentum push the KLCI past the 1,100 mark on the first day of trading in 2007?
Maybe not on 3 Jan 2007 but the general outlook is that the market will move beyond this barrier soon.
Just as the local bourse will continue to grow, so will the unit trust industry. Many investors who have put their money here will have gained a tidy profit. I hope you are one of them.
So what should you do? Will you continue holding on to your units or will you cash out?
It’s human nature to be greedy, so chances are that we’ll just sit tight on our present investments and hope that it will grow some more. But if I were you, I will first of all determine whether my original investment objective has been met.
For example, when you first invested in a particular unit trust, did you set a target? A 20 per cent gain? Thirty per cent? If you did, then it is time to act if your target’s been reached. You’ve got to learn to be disciplined. It’s time to cash out your profit.
But there is also another ploy you may wish to adopt. Say, your investment is in equity funds. You may now decide to switch out a portion of your investment to a more conservative fund like a balanced fund. This way, you cushion some of your profits without exiting the market while you still maintain some interest in you original unit trust investment.
Switching is about as old as the local unit trust industry itself and different companies have different policies on this. It’s best that you check with your consultant if you have an intention to switch your portfolios around.
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