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BUSINESS NEWS - In a year that saw more than sixty countries holding national elections, emotions ran high throughout the world, and if you stuck to basic investment principles and stayed the course, you will likely be rewarded with strong investment returns over the long-term.

Basic investment principles:

Diversification
This speaks to the importance of diversification and not having all your eggs in one basket. Allocating your entire net worth into one stock or asset class is a risky endeavour. If the stock or asset class does not perform, it can negatively impact your portfolio. 

By diversifying, you spread your net worth across multiple asset classes that work in different directions, thus limiting the fluctuations in your performance. 

For example, stocks tend to be negatively correlated with bonds. In the event of a stock market correction, your bonds should provide balance to your portfolio and potentially offset any losses.

Therefore, proper asset allocation is seen as critical to becoming a successful investor. That is why diversifying your portfolio can be so important. It helps offset poorly performing assets, so you're not forced to sell low and experience damaging losses that impact your financial goals. Instead, diversification allows you to better absorb reasonable dips in performance and stay the course with your investments, so you have a better opportunity to reach your goals over the course of your investment horizon.

Diversification across asset classes is also key in achieving higher than inflation returns, thus mitigating the decrease in the time value of money.

Offshore exposure
A common mistake made by investors is not having adequate offshore exposure. The South African economy represents 0.7% of the world economy and one simply do not have a broad enough selection of world class companies with the same growth potential as the rest of the world. 

Our strategy is to invest at least 40% to 50% of our clients’ assets in offshore markets, although this may vary based on strategic changes made to realise some profits due to the weakening of the Rand, and each client’s specific financial goals.

Ignore the “noise”
We should not make any important investment decisions when it feels like everything is
collapsing around us and it feels like the world is in turmoil. Expect and accept volatility.

Market volatility is a given. Rather than attempting to time the market, focus on time in the market. Historical data suggests that markets have consistently experienced steady gains over time.

Do not abandon your plan
Understanding your financial situation is key. A sudden market drop can have varied implications depending on your life stage, personal financial goals and underlying asset allocation. It is essential to consult with your financial professional to minimise the impact of any impulsive decisions.

Stay invested
The key to living with market volatility is focusing on long-term results. Staying the course can be challenging, but it can also create opportunities. Short-term losses can be nerve-wracking, but making decisions based on emotions can be costly.

“Successful investing takes time, discipline, and patience” - Warren Buffet

 Our office details in the Garden Route:

PSG Mossel Bay Diaz                                                                       PSG George Central                      
Sioux Building                                                                                   Dynarc House, 2nd Floor
16 Sioux Street                                                                                 31 Courenay Street
Mossel Bay                                                                                        George 

https://www.psg.co.za/mosselbaydiaz                                   
https://www.psg.co.za/georgecentral