News from Europe has been relatively quiet so far, or at least encouraging. From the summit in Europe, has come news that they will set up a Europe-wide banking supervisory body by the end of the year. Emergency measures agreed at the summit will also allow the Eurozone 50 billion bailout fund to recapitalise ailing banks directly without having to first go through countries and add to their debt burden.
Thus although markets have been quiet, there has been a steady and gradual rise. As is the case when things have settled down somewhat in Europe, when investors look around, they find that the situation around the world is actually not too bad. US is in recovery, Asia continues to grow, so, as long as Europe does not go down and drag everyone down with it, the outlook for markets would be actually quite positive. Earnings have been growing steadily as well, and this applies to Asian markets as well as US markets.
That said, although earnings have been growing, the market is net down from its highs this year, meaning that valuations are now even cheaper than at the start of the year. This is a good sign. Although patience will be required as there are many jaded investors and caution remains very much present in markets, we should see markets steadily recover lost ground from here barring another blow-up in Europe.
This is a good time to consider a Regular Savings Plan (RSP). Not only are sales charges low at this point, they are at zero for the 51 WISE bond funds on Fundsupermart. So, even if you are not convinced or brave enough to enter or add to equity markets at this point, you can still build up your resources. Save up money by regularly adding to a fund through regular savings plans on Fundsupermart.
RSP is not as popular to investors as direct investing is. There is always a desire to time the market and there is also some unease in an automatic transfer of your money into a fund every month. But bond funds are generally less volatile than equity funds, so they can be confidently invested into regularly without worrying that another possible Europe blow-up will plunge markets into a spin. The roller coaster ride that equities have gone through this year has not seen the same things happen to bond funds at all. Most have been delivering low, but consistent returns quietly throughout this year.
So, while caution will very much remain in markets in the near future, I believe things have settled down, so markets should gradually recover from here on. But even if you have no confidence yet to enter now, build up your funds. There will come a time when the outlook becomes clearer, and you would not have regretted building up the funds to deploy within bond funds then.
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