According to most asset managers in South Africa, equities are currently trading at very high levels relative to historic levels.
This may seem to indicate that investors should be wary of investing in this asset class, or does it? How do I know what I should do to save successfully?
With increasing life expectancy as well as increasing costs in many spheres of life in South Africa, we need to remember that not only must we invest carefully in order to protect our capital from permanent loss of value, but we should also invest it wisely in assets which will grow its value over time in order to allow it to retain its value after the effects of increasing inflation.
The two main investment challenges which therefore face investors in South Africa are different, but equally important to deal with.
What simple advice can we keep in mind to ensure that we invest our money appropriately?
Approach a qualified Financial Advisor who will be able to spend time discussing what your desires, objectives and your purpose in life are and will then go about analysing your overall financial situation, including your current lifestyle and financial situation versus where you’d like to be in the medium and longer term. This will allow you to benefit from their knowledge and their objective perspective in determining a suitable portfolio of investments for each need.
Some of your money may need to be used on a home purchase in only say three years time, while you may be able to save for a lot longer for your child’s education. Together with your advisor, an appropriate mix of equities as well as other possibly less volatile assets could form part of a well-structured plan for your life and those of your loved ones.
Remember, no one asset class, or type of investment, fits all your needs. Everyone of us requires various different investments with different exposure levels to cash, government and corporate bonds as well as equities to achieve each objective’s specific goals.
If you don’t have an idea of how to go about achieving this, contact a registered Financial Advisor.