Podcast Summary
Equities and offshore investments: Long-term investments in equities and offshore assets offer inflation-beating returns, but fear of short-term risks may lead to missed opportunities. A disciplined monthly investment strategy can help mitigate market uncertainty.
Investing in equities, despite the short-term risks, is a proven long-term strategy for achieving inflation-beating returns. However, the fear of losing money in the short term can lead investors to be too conservative, resulting in missed growth opportunities. Offshore investments can provide access to sectors and industries not available in South Africa, making them an essential part of a diversified portfolio. The uncertainty of timing the market entry and exit can be mitigated by implementing a disciplined monthly investment strategy, such as rand or dollar cost averaging.
Emotional management, Behavioral biases: Effective investing requires managing emotions and overcoming behavioral biases, such as fear and uncertainty, through regular portfolio rebalancing and sensible risk-taking.
Investing involves managing emotions and behavioral biases, as fear and uncertainty can hinder success. Rebalancing a portfolio and embracing risks sensibly over time can help overcome these challenges. The global environment presents numerous factors impacting investments, including geopolitical tensions, inflation, and emerging technologies. Predicting market changes is difficult, and staying focused on long-term goals and embracing risks is crucial for building wealth. Timing the market and letting fear dictate investment decisions can lead to missed opportunities.
Investing in crisis: Investing during crises offers opportunities for innovation and diversification, especially with offshore exposure to mitigate risks and capture growth opportunities in emerging markets and disruptive themes.
Facing challenges and crises presents opportunities for innovation and finding new ways to mitigate risks. Regarding investing, having offshore exposure can offer protection during times of uncertainty and volatility, particularly for South African investors dealing with higher inflation and a weakening currency. This diversification not only helps counteract currency weakness but also enables investors to remain invested during periods of crisis and capture growth opportunities in emerging markets and disruptive themes, such as AI, that are predominantly listed outside of South Africa.
Offshore investing, JSE ETFs: South African investors can easily and cost-effectively diversify their portfolios by buying global ETFs listed on the JSE through platforms like Citrix. Starting small and investing consistently is recommended.
Investing offshore can be a simple and cost-effective way to diversify your portfolio, even for South African investors. Through platforms like Citrix, investors can easily buy global ETFs listed on the JSE, avoiding complex administrative processes and tax complexities. Starting with a small investment, such as $100 in the S&P 500, can help build a well-diversified portfolio. A personal approach could be setting up a debit order to invest consistently and build exposure to offshore markets over time. It's important to remember that consistent investment is key, rather than trying to time the market.
Investing Myths: Despite common beliefs, investing, even in index funds or following a benchmark, requires active decision-making processes, and balanced funds are not passive either.
Investing, even in index funds or following a particular benchmark, requires active decision-making processes. There's no such thing as passive investing. A well-diversified balanced fund that invests in both local and offshore asset classes is a good starting point for investors seeking a one-stop-shop solution. However, the amount of equity exposure and investment term vary depending on individual risk tolerance and investment horizon. Offshore investing offers more permutations, and tracking broad equity indices like MSCI World or ACWI is a good starting point. Balanced funds are not passive either, as the allocation to different asset classes involves active decisions based on research and projections. Investors should consider these factors carefully and seek advice when necessary.
Satrix portfolio changes: Satrix reviewed market conditions and made adjustments to its balanced portfolios, including increasing local bond exposure, decreasing inflation-linked bonds, selling local property for offshore property, and increasing EM equities and global listed infrastructure. These changes aim to shield investors from losses and provide upside returns.
Satrix, a popular investment choice for many South Africans, actively manages its balanced portfolios every two years, considering various market environments and consulting with other teams within the Greater Sunlam Group. In this round, they increased exposure to local government bonds, decreased exposure to inflation-linked bonds, sold local property indices for offshore property, and increased offshore exposure to EM equities and global listed infrastructure. The reasoning behind these changes includes attractive yields from local bonds, well-anchored inflation expectations, a rebounded local property market, and a strengthened rand. These decisions are made with the goal of shielding investors from losses and providing upside returns. Satrix's consistent ability to add value and leverage expertise in helping investors on their investment journey is a testament to their dedication and passion. Satrix is a registered and approved manager in terms of CISCO and an authorized FSP, offering a broad range of local and global investment solutions.