If leading global investors are concerned about these things, maybe you should take note too

If you’re currently in your twenties or thirties, you probably might have accumulated some savings in your bank account from working for a certain period of time.

And if you’ve been looking at ways to grow your money, you would likely have tried your hand at investing.

And unless you are finance-trained, you might have ended up asking someone such as a financial adviser (a.k.a. insurance agent) about the investing environment’s outlook in general and the risk it entails.

TLDR; You are probably vaguely aware that investing is one of the few ways to grow your money and mostly follow the advice given by your financial adviser.

So, here’s where you have two options.

You can watch this series of videos which feature the perspectives of top global investors who were at the recent GIC Insights 2019 event.

They are from major global investment firms such as Blackstone, Oaktree Capital Management and PAG.

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Or you can read our explanation of the three biggest trends that these folks are observing.

Still with us? Great.

1. While investing is always uncertain, investors can still position themselves to do well

As Tony James, the Executive Vice Chairman of Blackstone, puts it, the general case for investing is that it is always uncertain, with the only difference over the years being the degree of uncertainty.

He also cautioned against predicting the future: “It’s a form of arrogance to think you know what the future is going to be and that’s to be avoided.”

As such, one way in which a would-be investor can position himself against such uncertainty, is to have a portfolio that’s more conservative, according to Howard Marks, the Co-Chairman of Oaktree Capital Management.

In the words of Marks, a good portfolio to have in such an uncertain world is:

“One that has a little less emphasis on maximising returns in the good times, but puts a little emphasis on protection in the bad times.”

He also recommended investing in what investors call Fixed Income, which is defined as a type of investment security that pays investors fixed interest payments until its maturity date.

This is because such an investment promises to give you back your money at a point in time, assuming the promise has been made by a company with enough creditworthiness to keep that promise.

2. Currently, interest rates have never been this low for this long

So why should you care?

According to Marks, this is because low interest rates creates an environment more conducive for consumers to buy, but also has distorting effects such as encouraging risk-taking for higher returns, and making capital available for more risky projects.

Additionally, the low interest rates are an indication that global bond yields have essentially crashed. Around a third of all global bonds are negative yielding, according to Lim Chow Kiat, the CEO of GIC.

This means that investors are faced with quite a significant challenge in generating future returns.

3. But despite the challenges, there are still investment opportunities out there

All that being said however, there are still areas for long-term investment, if you know where to look, such as China.

According to the Group Chief Investment Officer of GIC Jeffrey Jaensubhakij, China is now the largest consumer market in the world, with 800 million consumers who are ready to spend.

What’s more, as per Shan Weijian, Chairman and CEO of PAG, China is now shifting its growth model away from investment towards domestic consumption.

This has resulted in falling exports and manufacturing as percentages of China’s GDP.

As such, the growth areas are sectors within China, such as private consumption, pharmaceuticals, entertainment and services.

Now you are slightly wiser about the investment environment and what you should be aware of.

This article is brought to you by GIC. For more information on investment, you can check out their video resources here.