The cost of admission: Manoeuvring volatility in a world at war

Feel free to reach out to PSG Wealth Manager  Emile Van Rensburg  directly.

The 2026 inflation landscape: A new benchmark

For years, South African investors were anchored to a 4.5% inflation midpoint. However, we have officially entered a new era. With the SA Reserve Bank successfully steering headline inflation towards the new 3% target (currently sitting at approximately 3.5% as of the latest January/February 2026 numbers), the goalposts for ‘beating inflation’ have moved. While this lower inflation rate is a ‘win’ for your purchasing power, it changes the math for your portfolio. We are no longer just trying to survive high inflation; we are positioning to capitalise on the interest rate cuts that typically follow. With the repo rate currently at 6.75%, we are in a ‘moderately restrictive’ phase, meaning the window to lock in yields before further declines is narrowing.

Volatility: The tollgate to wealth

Geopolitical conflict – whether in the Middle East or Eastern Europe – is often the primary driver of market dips. It is essential to remember that volatility is not risk – it is the price of admission.

Historically, when conflict strikes, markets experience a sharp, emotional flight to safety. But as we’ve seen in the resilient performance of the JSE (which hit the historic 100 000-point mark last year), those who sell during the dip don’t avoid risk – they realise it. They turn a temporary fluctuation into a permanent loss of capital. Wealth is created by those who can tolerate the ‘red’ on their screens today to capture the ‘green’ of tomorrow’s recovery.

The anchor: Cash and bonds in a low-inflation world

In a well-diversified PSG Wealth portfolio, we don't include cash and bonds as a ‘fallback’ for equities. We include them as strategic anchors.

Cash: Even as inflation settles near 3%, cash components still provide a ‘real’ (above-inflation) return. More importantly, they provide the liquidity needed to fund your lifestyle, so you never have to sell your growth assets (equities) during a war-themed market dip.

Bonds: As the interest rate cycle turns downward, bonds become particularly attractive. When rates fall, bond prices typically rise, providing both capital protection and a boost to your total return.

The risk of ‘wait and see’

The most dangerous strategy in 2026 is waiting for the world to ‘calm down’ before investing. Markets are forward-looking: they price in peace long before it arrives. If you miss the best days of recovery because you were waiting for inflation to hit exactly 3% or for a conflict to end, the cost to your long-term wealth is far higher than the temporary discomfort of volatility.

Final thought

Wealth management is an active journey. At PSG Wealth, we use these periods of uncertainty to rebalance and ensure your asset allocation is optimised for the current cycle. Volatility is inevitable, but losing your bearings doesn’t have to be. By anchoring your portfolio with low-volatility assets and staying committed to your growth engines, we ensure that your long-term goals remain firmly in sight.