1. How long are you planning to invest?
As with any investment, you should decide how long you want to invest. With any stock market or property investment, the time scale is important and should be at least five years.
2. Consider your attitude to risk
If you are a cautious investor, I would suggest that equities may not be the best place to invest. But if you are willing to be more adventurous, they may well be a good place to park your money as prices are already so low, although it could be a bumpy ride in the short term.
3. Cash is king for a lot of investors
Even though there is little or no interest to be earned, the security and capital protection that cash can offer is attractive and can outweigh the lure of growth elsewhere. However, with the current financial crisis affecting banks around the world, it is ironic that what is generally viewed as a safe haven could be more risky if something were to happen to the bank that your money is placed with.
4. Beware of guaranteed products
There have been a lot of guaranteed products available on the market, offering a guaranteed rate of growth, a guaranteed rate of income or a combination of the two. However, when the guarantees are looked at in more detail, they often require very precise criteria to be met for the guarantee to be honoured, effectively making the product much more risky than it first appeared. This was further compounded by the collapse of AIG and Lehman Brothers, who underwrote a huge amount of guaranteed products. So it is still unclear as to what investors may get back from their investments.
5. Property can be an attractive option
Property can be a good investment in some parts of the world. Indeed, it has recently been reported that Gulf residents have been buying large amounts of property in London, taking advantage of reduced prices and the better exchange rate.
6. Low-priced equities
All equities are now trading at a much reduced price from a year ago and could be viewed as a buying opportunity if you are willing to accept that the markets may fall further before they recover. But with a five-year view, I believe there is growth to be had.
7. Consider commodities ...
Commodities have also been hit extremely hard over the past year. Oil is trading at about US$105 (Dh385) a barrel, while iron ore, copper and nickel have halved in value. With the decreased prices, investment in the discovery of new sources of material will slow down and cause prices to increase when the world's economy recovers.
8. ... and currencies
Another area that can be invested in is currencies. With the large and rapid fluctuations in currencies, it is possible to make considerable gains by buying and selling the right currency at the right time. However, the opposite is also true and you can quickly lose a lot of money if the currencies move against you.
9. Do your due diligence
With all investments, they should be thoroughly considered and investigated before you commit to placing your money into them. You should be prepared to accept the falls as well as the rises, and be happy to commit to them for the medium to long term. As with all aspects of your financial affairs, you should regularly review your situation to make sure it continues to reflect your wishes and requirements.
James Thomas is the regional director at Acuma Independent Financial Advice