2017 and where to put your money?
Preston Pretorius - 06 December 2016
Everyone living in South Africa can attest to the political instability of 2016. News article after news article has painted an ever bleakening picture of South Africa to foreign investors (and local ones). Between finance ministers being interchanged at the drop of a hat and an ever increasing likelyhood of a ratings downgrade (granted we have managed to get past the most recent ratings announcements) investors have slowly but surely been lured away from investing in our economy.
The African dream seems to be over.
South Africa is no longer one of the top choices for foreigners looking to get a more significant return than their money can get at home. GDP growth has flagged and for the 3rd quater dropped to a meager 0.2% (Ratings agencies are certainly watching this figure closely). Less money coming into our economy has a direct link to the slowdown in GDP growth.
Much can be done to improve our economic outlook but it starts with a clear and concise plan by goverment which is supported right through the ranks. A unified South Africa benefits everyone. Steps are being made in the right direction but alot still needs to be done. So in the meantime what steps can we take to maximize our investment returns while we hope for a better future?
Diversification. Investment diversification is one of the basic building blocks of a solid portfolio. Diversification is the fancy name for the advice: Don't put all your eggs in one basket. The basic principle behind asset allocation, a key element of portfolio diversification. Unit Trusts are the perfect tool for this (In specific balanced and flexible unit trusts).
Not only are Unit Trusts diversified but they are skillfully managed by a team of investment analysts lead by a portfolio manager. Most have performed better than the JSE All share index for the last year. Having an annual review of your portfolio will also allow some guidance by a professional but dont be afraid to ask questions, you should also have a basic understanding of the logic behind the advice.
Will things improve in 2017? Probably not yet, but here's to hoping.