A majority of forecasters believe the recovery in the Australian economy and share market will continue, but a vocal minority is warning that we haven't seen the worst of the global financial crisis.
Prescott Securities financial adviser David Middleton says there is a chance of a relapse.
"The banking system in the developed world is seriously damaged and governments are heavily in debt. The process of repair will inevitably be arduous", he says.
"While share prices have recovered somewhat from the drastic falls of 2008 and early 2009, they still look cheap compared to current company profitability.''
Your Money asked several financial experts for their top investment ideas for the year ahead.
1. Controlling cash flow is vital
Barker Wealth Management senior adviser David Kayser says cash flow is key to investing, "whether security of dividends or income to meet loan commitments.
"Ensure you can manage your debt on your income, and aren't reliant on growth to pay the interest bill".
Middleton says people living on their investment assets should be taking advantage of the current market strength to put aside funds in cash and term deposits.
2. Buy shares in quality companies
"The share market has concentrated on turnaround stories and ignored terrific companies that are often very expensive to buy," Mr Middleton says.
"These are businesses that will maintain some level of profitability, even during recessions.''
Woolworths, Ramsay Healthcare and Sonic Healthcare are examples.
Lincoln Indicators chief executive Elio D'Amato says investors should always aim to hold great businesses.
"We think the best option is to go with the quality businesses that have lagged the recent recovery stocks like Woolworths and CSL,'' he says.
"They have exceptionally strong fundamentals but because they're seen as defensive players people have seen them as a bit on the nose.''
3. Mining is a money magnet
"You can't deny that the materials sector continues to be a shining light for our nation and the share market," Mr D'Amato says.
"If you have faith in this nation you have got to have a BHP in the portfolio somewhere."
Mr D'Amato says investors can also take a look at smaller resources companies that offer growth potential and adds the uranium sector has a bright future.
4. Low risk doesn't mean low income
With interest rates on the rise, there is a growing number of options for lower-risk investment income.
Mr Middleton says people should take a good look at the options available.
"Longer term deposits at reasonably high rates may well be attractive at the time,'' he says.
"There are also opportunities in listed income securities offered by banks and other businesses with excellent credit ratings.''
Mr Kayser says these corporate securities, issued by blue chip companies, including the major banks, now offer a yield of more than 7 per cent "and do so with significantly less risk than investing in a number of other investment opportunities that are available''.
5. Investing is a risky business
Risk is necessary if you want good investment returns, but Mr Kayser says investors should only take on a level of risk that they need to not too much.
"Ensure you have a fall-back position whether that is a cash reserve or insurance to protect you if the worst happens,'' he says.
6. Too much debt can be dangerous
Investment debt is good debt compared with the bad debt of personal loans and credit cards but too much of it can lead to disaster, as many investors discovered in 2008 when hit with margin calls.
Mr Kayser says it is important not to take on too much debt, particularly with risinginterest rates.
"Stick to what you know and understand,'' he says.
7. Hunt for a property bargain
The chief executive of Adelaide-based property and finance group Investa Solutions, Ian Lloyd, says 2010 will be a good time to buy for property investors ahead of an expected growth period in the market in 2011.
"There's a lot of choice around now,'' he says.
"There's a lot more negotiation available because major banks have tightened up so much, so developers are ready to crack a deal."
8. Resource-rich regional areas should prosper
Mr Lloyd says the strength of Australia's mining sector will translate to good gains for property investors in areas near major resources projects.
Think about places like Mackay in Queensland, Geraldton in Western Australia and Port Lincoln in South Australia, he says.
Mr Lloyd says as well as capital growth, high rents paid by mining workers can help
with cash flow.
"We have seen it in centres like Karratha in WA.''
9. Ignore super at your peril
People may be nervous about pumping money into superannuation while there are reviews of the system under way, but Mr Kayser says super has many benefits, particularly on the tax front.
"You can invest in virtually any asset you like through super but you are paying a lower tax rate than you would if you held it in your own name,'' he says.
The catch is you can't get it out until you are 60, but this is not a big problem for most people.
10. Don't chase last year's winners
Mr D'Amato says investors should not blindly buy the investments that performed best in 2009.
"Usually if the horse has bolted, it has done its race,'' he says. "Don't be lured by the lights.''
