How can you recession proof your investment in 2020? Our experts weigh in.
“2020 will be riddled with many uncertainties, and we believe US will be a key driver for the overall economic outlook in 2020.
In the face of uncertainties, asset prices tend to be extremely volatile and unpredictable. So in 2020, investors can look to Gold as a potential asset to safeguard themselves. Gold is regarded as a safe haven asset due to its negative correlation to most assets, and the ability to hold its value during times of unrest. Because of those characteristics, it also adds diversity to the overall portfolio which is beneficial even in the absence of major events or recessions.”
Lee Yi Jie, strategist at Phillip Futures
“This question comes back to the fundamentals of why you invest. You need to understand your risk profile and know your investment objective. Are you saving for your child entering university in 5 years? You might have already saved up a sum of money and you need your savings to work harder. That shapes your objective. With that objective in mind, you can invest in suitable assets that suit your risk profile. More importantly, you need to do an annual review and see if your investment is still aligned to the market environment.
One thing that many people neglect to think about, is recession proofing yourself. You need to have an income to be able to invest.
Recession proof your job. The market is constantly evolving, so by going for courses, upgrading ourselves and our skill sets, we can better contribute to our workplace. That is why SingCapital is hosting its annual Investment Outlook Seminar for 2020 on Feb 8, supported by PropNex, Phillip Securities, and Aberdeen Standard. The seminar will touch on the investment and property outlook for 2020 as well as the financial strategies that can help investors take advantage of the current market environment.
Even when our job becomes obsolete, we have the skills to move into other roles.”
Alfred Chia, CEO, SingCapital
“No investment property can be recession proof. You can only look at more resilient properties, such as properties with good locational attributes, good qualities in terms of design, concept and facilities. You would also need to look at its ability to attract tenants, whether it is near offices or industrial parks. If you are able to find tenants, you would have less of an urgency to let go of it in a recession.
When you buy property as an investment, you must have a long term plan to finance it, because there is usually a long holding period. So it is essential that you don’t sell during a recession, because property prices historically tend to move up.”
Steven Tan, CEO, OrangeTee & Tie.
“Global economic growth is projected to remain lacklustre this year after a slowdown in 2019 and the recent coronavirus outbreak is also posing a threat to the fragile stabilisation in the world economy. Nevertheless, Maybank Group Wealth Management does not anticipate a significant decline in growth as the global economy is still supported by relatively resilient consumption and easy monetary policies. For instance, the U.S. Federal Reserve had resumed rate cuts last year and might have another rate cut, if not more, this year. In addition, there is potential for additional fiscal stimulus to support growth, particularly from Europe and Asia. Specifically, the Chinese government is likely to respond with more measures on both monetary and fiscal front to support the economy reeling from the virus outbreak.
Given many uncertainties on the global stage, it would be prudent to focus on capital preservation and manage downside risks. On balance, Maybank Group Wealth Management maintains a neutral stance on both equities and bonds. Both asset classes will likely generate positive albeit modest returns. In contrast, cash is becoming less attractive given expectations of declining short-term rates. It is important to diversify one’s portfolio and avoid concentration risk. Also, do not neglect alternative investments as they could play a role in reducing overall portfolio volatility. Gold was one of the best performing asset classes last year, underpinned by three pillars: growth concerns, global rate cut cycle, and political and event risks.
Maybank Group Wealth Management is positive on gold in 2020, based on the assumption that these three pillars will remain largely intact and could continue to support the performance of gold. That said, opportunities still exist in a late-stage economic cycle, where one could focus on income-generating assets, including dividend stocks and high-quality bonds to enhance returns.”
Adam Tan, Head of Maybank Privilege and Branch Distribution, Maybank Singapore.