THE VALUE OF A SOUND INVESTMENT PLAN

Feel free to reach out to PSG Wealth Adviser  Adri Horstmann  directly.

The import tariff announcement and trade war between the US and China as well as various other countries were preceded by a sharp decline in the US tech sector following the launch of the Chinese AI software DeepSeek competing with established players like OpenAI, leading to substantial market value losses for tech companies like Nvidia.

Apart from stock markets, US indices also suffered a blow. This also led investors to withdraw trillions of dollars from US markets seeking shelter in safe markets and asset classes.

Financial advisers cannot predict market downturns and volatility, but with a well-structured investment plan your investments are able to absorb market slumps.

A well-considered investment plan should feature the following:

A solid asset class composition

The role of your wealth manager is to determine your risk profile, then investing your money accordingly in asset classes such as local and offshore equities, property, local and offshore bonds, and money market funds. Different phases in economic cycles as well as macroeconomic factors such as wars, tariff hikes, the exchange rate and interest rates may have a material impact on certain asset classes. An experienced wealth manager can provide valuable guidance on rebalancing your investment in line with market conditions.

Diversification

Diversification across asset classes, sectors and geographic regions helps to absorb risk and volatility in your portfolio and deliver good returns over time. One of the key factors of a sound investment is to balance your risk appetite with your age, inflation, retirement planning and your investment horizon over time. While the US markets are currently in turmoil, other global markets such as India, Japan and some areas of Europe are offering excellent growth opportunities.

Risk management

An investment plan usually caters for specific savings goals – e.g. tertiary studies, a deposit on a home or car, overseas trips, retirement etc. Considering your risk profile and time horizon is essential. With a long investment horizon you can afford to take on more risk to earn higher potential returns over the long term, through higher exposure to local and offshore equities.

Long-term view

When markets respond violently to events such as Covid-19, the tech bubble in the US, tariff hikes, trade wars etc. investors tend to panic taking impulsive decisions driven by fear. A successful wealth manager understands the importance of a long-term investment plan that caters for your personal goals without being derailed by short-term volatility. A long-term investment plan keeps you focused on the bigger picture while you get to benefit from compound interest.

Liquidity

Liquidity is a driver of financial markets. It is crucial to also invest in asset classes that can be readily converted into cash if your wealth manager must make a quick move to navigate market conditions or if you urgently need access to cash.

An asset management team

Place your trust in a reputable asset management team with a track record of consistently delivering good returns in top-quartile funds over the long term, with the backing of competent research teams who scrutinise the markets and know how to absorb short-term market shocks. Trust your fund manager to be able to rebalance your portfolio if necessary.

Don’t let your investment plan and goals be derailed by one president or news headlines. Research has proven that staying invested in the market amid a political transition and global market downturn has always been the most reliable way of creating long-term wealth.

A well-structured investment plan based on your personal goals will provide peace of mind knowing that your portfolio will be able to absorb market shocks and volatility. You’re welcome to contact me for more information.