For roughly five years, many South Africans have been lucky enough to experience above average investment returns and generally stable market conditions. But sadly, all good things come to an end.
So far, 2016 has seen unstable Chinese markets, leading to many concerns in terms of reduced growth in China, which is the world’s second-largest economy. South Africa has already been negatively affected by this, as well as by a reduction in China’s demand for our natural resources. This situation is further complicated by the severe drought that we have been experiencing, which will lead to an increase in prices across the board. Due to these factors, as well as the local political climate, returns in the years to come are unlikely to be as good as they have been.
So… what should you do?
Do NOT panic. Although it’s difficult to be rational in times like these, there are some very good reasons to just keep swimming.
Think LONG term.
Seasons of plenty and seasons of scarcity are as old as the earth itself, and the investment world is no different. Stay put, and wait for things to even out, as they always do. Do not switch just to try and time the market.
Emotions are NEVER helpful to investments.
Compulsively checking your portfolio will only stress you out and possibly lead to an emotionally-motivated switch. You will very likely live to regret such a decision. Avoid the temptation!
It’s not ALL bad news. If shares are cheaper now, you can afford to purchase more of them. And when their value increases, you’ll be happy you stuck it out. The only thing you need to worry about is whether you’re invested according to your risk profile. If you are, stop worrying! And if you aren’t, speak to your financial advisor today.