Welcome to the latest edition of The Wealth Perspective

Embrace the chaos

Visiting the fuel station these days is a disheartening exercise. Few could have predicted the headwinds that have characterised the first half of 2022. We’re only just putting the Covid-19 pandemic behind us, and are already caught up in another storm of rising inflation, surging oil prices, and rising interest rates. Not to mention Eskom’s semi-permanent load shedding – it’s enough to drive you around the bend. This chapter on the investment journey and in life is about sowing in a time of drought. It’s about making well-considered and measured decisions.

Volatility can cause us to act hastily and irrationally
While the prevailing environment seems to warrant being alarmed and treading with caution, we should remember that when we invest, becoming victims of our own biases can make us act in irrational ways that can be to the detriment of our future selves. Considering the plethora of news sources we now have access to, it is natural to easily get caught up in the chaos, so don't be too hard on yourself. Our goal should be to remain steadfast and not to get caught up in the market noise, no matter how loud it may seem.

At PSG Wealth, we recognise our fiduciary duty to help guide you on your journey to a position of financial freedom. Volatility is often associated with hesitancy, but it also creates opportunity, which is why we want to help you embrace the chaos.

Reassess your investments
Lately, we have seen the markets take a lot of strain – due to the Russia-Ukraine conflict and the related ramifications we’ve witnessed and continue to live through. I know it can be discouraging to see the performance of your investments take a knock, but this is an important time not to make any hasty decisions by selling your assets, reducing your contributions, cutting your life insurance or stopping your retirement fund contributions. Instead, use this time as an opportunity to reassess where your investments and savings are, identify the gaps and, with the guidance of your adviser, work diligently towards closing those gaps.

Since we are surrounded by news of the negative impact the conflict has had on global markets, you’d be forgiven for thinking that your investments will tumble interminably, or that contributing to your savings and investments is doing more harm than good. Moreover, if you’re constantly hearing from those you know and trust that they are currently selling their underperforming investments or stopping their policy premiums to try and stem further losses, you will be inclined to believe the right decision is to follow their lead and do the same.

There are times when the best action you can take is not to act at all
Sometimes the most difficult thing we can do is to sit still and let things be – especially when all evidence around us is prompting us to take action (and doing nothing feels like inaction, making you feel like you’re not taking control). However, for the sake of the wellbeing of your portfolio, it’s important to guard against the tendency to act in haste.

We must ask ourselves one question: What happens when the markets recover?
Markets are volatile by nature and do not remain in one position for long periods. Selling off your investments now will permanently lock in the losses, meaning you’ll miss out on any gains made when the markets recover. In the long run, maintaining your investments will make a huge difference to your future returns, so stopping your contributions in testing markets will only rob you of the possibility of financial freedom.

Use this investment and savings month as an opportunity to adopt a long-term mindset, remember what financial goals you are working towards, and resist the temptation to make decisions for short-term gains that will undermine what you have worked so hard to build up over a long period.

Whether you are looking for tips on how to get started or build a nest egg, or want more information on how to expand your investment portfolio, I trust you find the insights in this issue helpful on your investment journey. Remember, we are here for you, every step of the way.

A Word from our CIO - Adriaan Pask

Industry Views - Nirdev Desai

Investing and trading - Wendy Myers

Estate Matters - Mariska Comins

Quarterly Insight - Jan van der Merwe

Employee Benefits Insight - Mariska Comins

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