Tips For Investing In 2013

Online, June 25, 2013 (Newswire.com) - After a strong Q1, what remains for 2013? Corolla Financial believes that there is plenty of room for growth and a great year ahead for investment across the board. There are a number of factors that investors would be wise to take into consideration when deciding how to allocate assets in 2013.

Is liquidity readily available? Liquidity is essential to any properly balanced portfolio. One can never predict when the need for cash may arise, and neglecting to preserve liquidity is a common mistake that leads to the inability to properly manage the illiquid portions of a portfolio.

Is a portfolio sufficiently flexible that will allow investments to be moved quickly from one asset class to another? In 2013, many predict that bonds which have performed well over the past few years could be in a bubble that could burst at any time.

There are a few indicators that help investment managers gauge moves in equities. First, the Equity Risk Premium (ERP), which measures the value of equities over a risk-free base such as government bonds. This value is currently high indicating that equities present good value. Second is the Chicago Board Options Exchange Volatility Index (VIX). When the VIX is low it indicates that equity markets will be more stable. In the past high VIX values have been indicative of market crashes in the same year. Currently the VIX is very low, around 13 compared to 70 in 2008, indicating that equities will likely have a positive year.

One other gauge to consider is the price/earnings ratio of individual companies. Currently there are many equities trading at very low P/E ratios with indicates that these equities are trading below their potential.

Of course these factors are never sure bets, and though many gauges indicate great equity investments for 2013, one should always consult their financial adviser before making investment decisions.

Does a portfolio include property? This asset class is an essential part of any overall allocation of net worth. With opportunities to access the property markets in a variety of ways ranging from traditional ownership to funded approaches, one should not overlook property as a long term investment option.

Commodities are also an asset class that should be taken into account when managing a complete portfolio. Most are familiar with Gold and Oil, but what about other commodities? These markets can be very volatile; however with a growing global population many food commodities could return significant gains.

Are investments geographically diversified? Many invest only in their home country, or markets that they are familiar with, but there are tremendous opportunities overseas. Despite concerns last year, China's political transition has been successful and double digit growth is projected to resume indicating currently undervalued market opportunities. There are bargain buys to be had on US as well as European exchanges, and it would be wise to hold assets from various markets to ensure global diversity.

Whether investing to create or protect wealth, diversity is of the utmost importance. In 2013, seek out opportunities that are diverse by asset class as well as geography, and consult your adviser before allocating a large portion of your assets to any one class, market or geographical location.