Not everyone’s investment goals are the same.

  • We are at different stages of our lives.
  • We have different personal circumstances.
  • Our risk profiles are different.

Our investment portfolio’s need to be structured to meet our specific goals and priorities.


What is your time horizon?

Are you putting money aside in case of emergencies (short term goals) or are you planning to fund your children’s education or planning towards your retirement (long term goals).

Different investments behave differently over time.

  • When do you need to access these funds?
  • How much short-term volatility can you afford?

It is imperative that we put a plan in place and pick a combination of investments to suit our goals and time horizons.  The longer the investment time horizon, the more risk one can generally afford to take in order to achieve growth that contributes meaningfully towards these goals.  Returns do not come in a straight line.  If you draw money early from a long term investment – you run the risk of locking in losses if the market is going through a down period.

However, choosing to save in a bank account presents you with another risk, inflation.  Inflation erodes the value of money overtime. Meaning you are able to buy less with the same amount of rands. No matter how consistently you save, if the money you save doesn’t grow enough to at least have the same amount of purchasing power at some point in the future, then you are not rewarded for your discipline and sacrifice and you are in fact losing money.

Risk vs Volatility

Risk and volatility are not the same thing.

  • Risk is the potential of the loss of capital while;
  • Volatility is, in essence, the fluctuation in an investment’s value.

Different types of investments carry different levels of fluctuation and deliver different returns.  Volatile asset classes should be avoided if you know you will need to access the money  in the short-term.  However, just because an investment is more volatile does not mean that it is more risky in the long term.  The real risk is permanent capital loss over your investment time horizon, not how smooth the ride is.

Make conscious choices

Know how much risk you are comfortable taking on and how much return you would ideally like to achieve.  Investing accordingly is the key to allowing you to remain disciplined and committed to your investment plan.

The best way to ensure things go according to plan is to have a plan in the first place.  There are also some good habits that you can consider adopting:

1. Pay yourself first.

2. Invest tax refunds.

3. Preserve your retirement savings.

4. Maximise your bonus.

The festive season is upon us!  Where we tend to overindulge both our appetites….and our wallets.  This December we would like to encourage our clients receiving  a bonus or 13th check to allocate some of it towards savings!  Don’t mentally spend your bonus before it arrives.  Consider the tax benefits you receive from contributions to a retirement annuity.

As a member of a retirement annuity fund, you are allowed the greater of the following three tax deductions:

  • R1 750
  • R3 500 less any contributions made to a pension fund
  • 15% of your non-retirement funding income less allowable deductions

Bonuses can have a huge impact on any shortfalls in your savings – giving you a chance to take a big step ahead in your financial plan.

“Don’t save what is left after spending; spend what is left after saving”.

Based on the GrayIssue, 1 August 2014, issue no. 158