Stocks historically provide the best long-term returns. However, individual investors have different tolerance levels when it comes to accepting risk and losses.
Investment portfolios are classified into three categories: conservative, moderate and aggressive.
For conservative investors, about 20-30% of their portfolio is in stock investments, 40-70% is in bonds and roughly 10% is for alternative investments.
For moderate investors, half of the portfolio is in stocks, 30% is in bonds and 20% is in commodities and alternative investments. Of the total stock portfolio, half is allocated to local shares and half global stocks.
An aggressive portfolio comprises 70% stocks, with the remaining 30% in bonds and alternative investments, including gold and Bitcoin.
During the recent bank collapses in the US, the dollar depreciated as a huge amount of funds were injected into the financial system to help the banks survive massive withdrawals.
The turmoil caused the prices of gold and cryptocurrencies to skyrocket as both assets are considered as having an inverse relationship to the dollar, said Nuttachart Mekmasin, vice-president of Trinity Securities.
However, gold and cryptocurrencies are highly volatile assets. Even an aggressive portfolio recommends a maximum investment of only 20% in these assets, while a conservative portfolio contains neither gold nor cryptocurrencies.
The chance the gold price continues to surge is limited unless an economic recession or serious financial crisis occurs, Mr Nuttachart said.
For the rest of 2023, Trinity Securities lists these risk factors for investments:
With a high rate of inflation and interest rate hikes causing the cost of living around the world to rise, this is causing a decline in exports. A recession could be on the horizon.
If tourism is weaker than expected, failing to meet foreign arrival estimates of 30 million this year, then Thai economic expansion might fall below its target.
Domestic politics should be monitored after the election, determining whether political parties can form a government smoothly. If there is a problem, a political vacuum could last longer than expected, potentially delaying the government's annual budget payments and affecting GDP growth in 2023-2024.
Geopolitical risks, especially China-US conflicts and the Russian invasion of Ukraine, need to be monitored throughout the year to determine whether these situations will escalate.