Welcoming in 2014

23 January 2014

As we start another year, we look forward to a guaranteed event-filled 2014.

Although the JSE is still running strong, we do believe it's going to be a difficult year for the new investor. We feel optimistic though that opportunities are available, especially in the globalised world. Financial discipline, however, will be required NOW more than ever.

Time and again people get anxious that their equity-based investments will under-performing during bear market phases and are inclined to wait for stability before investing again. While that course of action may sound like it makes sense, it will actually hamper your earning power.

Time in the market, not timing the market, ultimately determines how much money you'll make. The more you invest, the more likely you are to achieve your goals, regardless of whether you earn higher or lower returns. Whenever you stop investing, you lose the benefit of time in the market. When investing it is vital to be aware of your investment objectives and stick to them.

The type of investments you choose will depend on whether you are saving for long-term or short-term goals. Your time horizon is the expected length of time you will be investing in order to meet your goal. Determining your time horizon will help you decide which types of investments are appropriate for you. For example:

• Retirement Savings:
  In order to create wealth and to beat inflation, investors need to take a long term view of investing. The longer funds are invested, the greater the benefit of compounding is on the ultimate value of the investment. Allocate money to equities for long term investing for retirement and capital growth to see you well into your old age. Do not switch strategies during times of market volatility. Your investment term must typically be over a period of more than 7 years.
• Educational Savings:
  If you have young children it is vitally important to establish a completely separate fund to cater for children's education. Here the age of a particular child will determine the minimum term of the investment.
• Specific Savings:
  Here your money is structured on the basis of a specific financial need such as an Emergency Fund: Typically this would be a high yielding Money Market Fund.

Silke Financial Services advocates that investors stick to their disciplined investment approach as their personal goals and objectives have not changed. The good buying opportunities are ever-present. Clients investing in equity unit trusts should keep on investing. Your patience will be handsomely rewarded.

We wish all our clients the very best for this year.

Silke Financial Services has the skill and expertise to construct a well-diversified portfolio to suit all risk profiles according to a client's investment time horizon.