Don't let market volatility upset your goals

8 July 2014

Silke Financial Services is firmly of the view that when the share prices of good sustainable companies with good earnings drop, it presents astute fund managers with a golden opportunity to buy these shares at discounted values, which in the long-term can only benefit the investor. Apart from good dividend growth, there is no other way to achieve inflation-beating growth. So in the end, we like 'wobbly' markets as it provides opportunities for investment growth over the medium to longer term.

To panic during times of market volatility is the worst thing you can do as one cannot time the market.

It is Essential to always align your investments with your time horizons

For long-term goals we consider long-term, growth-oriented investments like general equity unit trusts. With this long-term view there is no need to 'time the market' and take profits at exceptionally high market levels. The longer your investment time horizon the greater you can afford exposure to equity funds. Don't make the mistake of disinvesting if you are a long-term investor. While risk sounds like something to avoid, there can be an upside - greater risk may offer the opportunity for greater rewards over the long term.

Balanced Funds are actively managed and ideal for time horizons of 5 to 7 years and generally have lower equity exposure compared to funds with full equity exposure.

Your short-term goals call for investments that are more conservative, and more accessible. For example, if you're investing to save for a deposit on a home, you'll want quick and easy access to your funds and you will not want to take on any major risk.

Monthly investors must take cognisance of rand-cost averaging and not try and 'time the market'. Investing on a monthly basis will buy more units of a unit trust when prices are low and fewer units when prices are high. Provided the fund gains value over the long term, you will profit from your purchases during short-term declines.

Risk profile & goals

The risk profile of every investor changes with time. It is a function of his financial goals and the closer he is to his goals. Goals that are approaching within 12 months to 24 months should be kept in safer investment avenues, so there is no risk of the goal not being met. In addition to this, every investor should follow an asset allocation model. So it is best for an investor to re-balance his portfolio regularly so that he is protected from the volatilities in the stock market.

Silke Financial Services offers advice on funds at all levels of risk. We research the market in order to find the most appropriate funds at all risk levels. But don't make the mistake of disinvesting if you are a long-term investor.

Silke Multi-Manager (SMM) manages a diverse range of portfolios on behalf of Silke Financial Services. These portfolios are designed to meet the investment needs of Silke Financial Services clients while catering for investors who have different investment time horizons.

Below Scattergraph of Silke MM Portfolio's (A scattergraph is made up of a horizontal x axis that represents production activity, a vertical y axis that represents cost, data that are plotted as points on the graph and a regression line that runs through the dots which represents the relationship between the variables)

Planning for your rand's and cents is NOT a D.I.Y. activity. It requires expertise from a trained professional. Building and protecting your assets entails systematic planning and discipline. Whatever your aim, chances of success can be dramatically increased by taking an informed and organized approach.

So, honestly, do you have a legitimate financial plan, yes or no?