If you’re looking at the current economic climate and asking yourself “how do I start to invest my money?” you are probably looking at the current markets and salivating at the opportunities that it presents. If so, then you are like many investors who are sitting on the side lines, wide eyed at the valuations. Look at Japan for instance…many companies are selling for less than half of book value. There have never been valuations at this level in a developed economy. Some companies which are generating decent cash flows are valued at less than their net cash position. It is simply unreal. The question is why aren’t these companies being bought? The answer is that no one can access capital to buy at these insane levels….and this doesn’t look likely to be resolved any time soon.

I’m waiting until I can see the whites of their eyes before I step up and start buying.

If this is your first foray into investing, there are a few things that you should remember. Investing at times like these will over a long period prove to be a very good idea if you invest in indexes and don’t try to stock pick a market like this without a high degree of knowledge.

Sectors can be a great idea too. A lot of it really depends on what age you are, what you’re trying to achieve and how long you are happy to leave the money invested. In addition, I think I would carefully consider my rainy day money and my job security. If there’s a chance that you could need to cash back in a year or two if you get laid off, then this is probably risky strategy.

If however, you have 5 years plus, a stable job and an understanding that prices could fall further from there, and then you will have a plethora of picks. Most of my favourite ones are in emerging markets which I believe will recover faster than the west once this crisis passes. The valuations at these levels make these markets extremely appealing.  Once you know what your time horizons and risk appetites are, you’re a long way to answering the question “how do I invest my money”