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Back to News Newsletter 01 Oct 2014
01 Oct 2014

Dear Client

It is now many years that we have been warning clients not to be over exposed to a single main asset class. Investors are usually either over exposed to the main asset class equities or the main asset class fixed property.

Economists advise that investors should be evenly exposed to 7 main asset classes, but if alternative assets (Hedge Funds) are part of the mix, exposure to 4 main asset classes is okay as alternative assets seldom correlate with the other main asset classes.

Have you heard of people saying fixed property is a solid asset class? Have you heard people say, “You cannot go wrong investing in fixed property?” The truth is that there is no such a thing as a solid asset class and it is dangerous and unwise to over expose yourself to one single main asset class, as the particular asset class to which you are over exposed, can be the next main asset class to be hit hard by the next share market crash and it can wipe you financially out if you need your assets during the period of the crash, for instance if you are already retired during that period.

Fixed property in the first world countries, America, Japan and Europe has been hit hard by the credit crunch crash of 2008 and some of them are only recently busy making a comeback, but some not, according to the article with link from the Business Day 17 September 2014 “Spain’s house prices ‘will fall for another year’”

Andre Delport

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