13
April 2021
Welcome to the latest edition of the Wealth Perspective
Etienne de Waal, Chief Executive Officer
PSG Wealth
After a year in which unemployment reached an all-time high of 30.8%, and the economy contracted by an estimated 7.2%, many investors are understandably anxious about the low growth environment and current volatility. The Covid-19 pandemic has affected our communities in almost every aspect of our lives, and from an investment perspective it has caused massive disruption to the world’s financial markets. Within this turbulence, for many people it is the risk, rather than the return on their investments, that has been front of mind.
“ Within this turbulence, for many people it is the risk, rather than the return on their investments, that has been front of mind. ”
Risky Business
When you invest, you take on a certain level of risk. Generally, the more risk you take, the more the potential reward will be. Alternatively, if you choose to take on very little risk, you could miss out on potential gains and may not make enough money to meet your investment goals. For example, if you decide you need an average annual return of 7% in order to meet a financial goal, and you invest in low-risk investments that only deliver 3%, you won’t lose money but you won’t meet your goal. And if your goal is to retire comfortably, the lower return might mean that you need to delay your retirement or accept a lower annual income in retirement. So, rather than trying to avoid risk, it is best to understand it and learn how to manage it.
Diversity and Discipline
Some investors make the mistake of putting all their eggs in one basket. By only investing in one type of investment product or asset class, they face a greater risk of not getting their desired returns. What is key is to manage your savings and investment risk through diversity.
In today’s uncertainty, those who have been retrenched or have had to change jobs would be highly tempted to cash in their pension fund in hopes of paying off their debt to achieve financial freedom. This would be a big mistake. All they would have done is cancel out their future retirement income. And as Gerhardt says, many of us will enjoy much longer lives, which will require greater savings. You will therefore benefit from exercising discipline and sticking to your financial plan.
Get Expert Advice
Whatever stage you are at on your wealth journey, getting expert financial advice to educate you will help you understand and manage risk, and ultimately make good investment choices. I therefore encourage you to meet with a skilled wealth manager to discuss your investment objectives and risk appetite. From there, you can create a wealth plan that can help you achieve your short-, medium- and long-term financial goals.
Please read the rest of the Wealth Perspective here
A word from our Chief Investment Officer
Have you thought about the risk of inflation?
Adriaan Pask
CIO, PSG Wealth
Industry Views
Understanding your risk tolerance
Nirdev Desai
Head of Sales, PSG Wealth
Estate Matters
The risks of DIY estate planning
Gerhardt Meyer
Head of Technical Support, PSG Wealth
Quarterly Insight
Time to set up your risk-proof budget
Jan van der Merwe
Head of Actuarial and Product, PSG Wealth
Employee Benefits Insight
How to deal with longevity risk
Gerhardt Meyer
Head of Technical Support, PSG Wealth
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