Low inflation: A golden opportunity for investors

Feel free to reach out to PSG Wealth Adviser  Chrisley Botha  directly.

In short, it means the Reserve Bank wants the cost of living to rise more slowly and the economy to function more predictably. For the ordinary consumer, it means food, transport, and other basic expenses should become more stable. For investors, it means a more reliable environment in which to make financial decisions.

The benefits of lower inflation

Low inflation brings several advantages for both consumers and investors:

• Purchasing power is preserved. Money loses value more slowly, making it easier to plan ahead and save.
• Investments deliver stronger real returns. With lower inflation, your investments don’t need to work as hard just to beat inflation — more of what you earn stays in your pocket.
• Interest rates can trend lower over time. Sustained low and stable inflation allows the Reserve Bank to reduce interest rates, making debt cheaper and encouraging economic growth.
• The investment environment becomes more predictable. Companies and investors can plan strategically when inflation doesn’t fluctuate sharply every month. This builds confidence and attracts capital.

How can you take advantage of this opportunity?

For many people, lower inflation is just a headline in the news. But for those serious about their financial future, it is a golden opportunity.

• Strengthen your savings habits. Put extra money into your emergency fund or money market funds. Since your savings hold more value, you get more bang for your buck.
• Rebalance your portfolio. Lower inflation allows you to keep a bigger share of your investments in lower-risk instruments without rapidly losing purchasing power.
• Think internationally. Now is a good time to diversify your portfolio with offshore investments. This gives exposure to sectors like technology and healthcare that aren’t available locally.
• Make long-term decisions. Consider fixing debt at lower interest rates or entering long-term contracts. With inflation low, your future costs are more predictable.

Where should you invest now?

The right investment naturally depends on your risk profile and time horizon. Here are a few guidelines:

• Low risk, short-term: Money market funds and short-term bond funds are ideal for people seeking stability and easy access to their money.
• Moderate risk, medium-term: Balanced funds combining local and offshore equities, bonds, and property offer both growth and security.
• Higher risk, long-term: Offshore equity funds in sectors such as technology, infrastructure, and healthcare. Locally, large, established companies with global exposure can also present strong opportunities.

The golden rule here is diversification: don’t put all your eggs in one basket. Spread your investments across different asset classes and regions.

What can you do with your financial adviser?

Now is the ideal time to sit down with your financial adviser and review your entire plan. Ask yourself the following questions:

• Does my portfolio still match my risk profile and long-term goals?
• Is this the right time to pay off debt, or should I rather invest more?
• How much should I hold in lower-risk instruments versus growth opportunities?

The most important advice, however, is simple: keep investing. Many people make the mistake of waiting for “greater certainty,” but the future has always been uncertain. The best time to execute your plan is when the opportunity presents itself — and low inflation is exactly such an opportunity.

Low inflation is good news for every household, but it must be actively leveraged. It is a golden chance to strengthen your financial plan, diversify your investment portfolio, and bring your long-term goals within reach.

In other words: don’t be passive now. Use this opportunity to improve your financial position — your future self will thank you.

Feel free to reach out to me at: ChrisleyBotha@psg.co.za | 082 413 1811