Where not to put your money this year

Overall, the world economy is already in cloudy weather.

Europe is still in crisis, the US is in an election year when most things are in paralysis and the economies of China and India are slowing down because of poor consumer demand in the West.

While Singapore itself remains Triple A, a topnotch place - and environment - to invest or work out your strategy, investors need to exercise extra care when deciding where to put their money.

How careful should you be?

Which are the areas to avoid, at least for the time being?

There is always money to be made, even in the worst of times.

But unless you are in the Warren Buffett class and can afford to be burnt now and then, you want to be much tighter with your cash.

The general operating principle is: When times are bad, do not invest in anything which requires large outlays of cash.

For example, property needs loads of money and it is not going to give you profits in the medium term when the economy is not so good.

Better to put your money somewhere else.

Besides property, where are the other areas of concern? These are:

• European bonds

That Europe is in crisis is not in dispute.

One contrarian view is that the larger and richer economies will have to step in to solve the debt problems once and for all and it will be back to business as usual.

But , the crisis has been dragging along for a while, with no such fairy tale ending anywhere in sight.

The greater likelihood is that the debt-ridden countries may default on their loans because it is politically hard to expect voters to bite the bullet.

And your European bonds may become worthless.

• Commodities

Commodities are tools of production.

They are the components of cars, buildings, household items.

When the demand for these things is affected because consumers - especially in the more affluent West - lose their purchasing power, the prices of these commodities decline.

Hence, you are not going to get much for our investment here, it may be stuck or even take a southward spin.

• Gold

It is said that sovereign countries can go bust but gold cannot.

Yes, some people see it as a hedge in incertain times, when the capitalist/monetary system itself is under pressure.

But we are talking about physical gold. The truth is that gold as a trading item is an overpriced commodity today. At best, it is consolidating - as are a number of other raw materials.

• Exotics

These are things like antiques, paintings and wines.

Of course, you can buy these - for personal and aesthetic reasons. Some can be bought at "bargain" prices.

If you have tonnes of money to spare, no problem.

But those who wish to buy these and sell them for a good profit may find no buyers waiting for your Tang vase or lesser known Salvador Dali portrait. Easy to buy, hard to sell.

• Warrants

A warrant is a derivative instrument whose value is dependent on an underlying asset. The investor can buy many more units of warrants than if he had bought the asset itself. It offers him flexibility and if the asset gains, the investor gains many times over.

The catch is when the asset does not move because the economy is bad. Worse, if the asset declines, the warrant can become of no value whatsoever.

For a start, here are a few investment solutions available in the market. To find out more, visit any DBS branch islandwide:

Investments Solutions for Singaporeans/PR's

DBS eSavings Plus Account https://www.dbs.com.sg/personal/deposit/esavingsplus/default.page

DBS eAutosave Account https://www.dbs.com.sg/personal/deposit/e-autosave/default.page

DBS eAutosave Plus Account https://www.dbs.com.sg/personal/deposit/e-autosave-plus/default.page

Investments Solutions For Foreigners DBS aSavings plus (For S Pass and EP holders) https://www.dbs.com.sg/personal/deposit/esavingsplus/foreigners/default.page

DBS Savings Plus - For all foreigners https://www.dbs.com.sg/personal/deposit/savingsplus/foreigners/default.page

Investments Solutions for Expatriates

DBS Expatriate Programme https://www.dbs.com.sg/personal/deposit/expatriate/default.page

Investments Solutions for Young Adults

DBS Remix eSavings Plus https://www.dbs.com.sg/personal/deposit/esavingsplus/remix/default.page