Ask Colin

I am thinking (early October 2000) about investing in managed funds. However, am I interpreting your articles correctly as suggesting I would be better to wait?

I agree that you should be cautious about putting a lot of money into funds just now. However, you can also be too cautious and end up doing nothing. After all, the market could continue to be overvalued for some time. I suggest you look at an approach like staging your way into the market over three to five years. Assuming five years, divide your capital into 10 and put one-tenth into managed funds each six months. That should spread your entry over the cycle.

Remember to diversify across at least five funds - say 20% each. I would put each tenth in a different fund till you have five and then add to them after that. In selecting funds, look at 5