If you're looking to make your money work harder for you, you have come to the right place. We strive to make investing as user friendly and affordable as possible. But investing is not something that should ever be taken lightly! You owe it to yourself to make sure you approach your investment journey responsibly - you need a plan and the necessary tools and knowledge to make the very best decisions for yourself.
Let’s kick off by looking at some of the underlying principles that can help guide your successful and responsible investment journey. These will help safeguard your capital by minimising the risk of losing money in the markets.
- Do your research: Before investing, you should learn as much as you can. There is a wealth of information available on the Satrix website, and also across the internet, in books, in videos, on podcasts, the list goes on. Be curious, ask questions, set aside time to learn. The greater your understanding of investing - from a personal finance and technical perspective - the more informed and responsible decisions you will be able to make.
- Don’t put all your eggs in one basket: Diversification is a key strategy for risk management. Spread your investments across different asset classes, sectors, and regions. Satrix’s funds are diversified in exactly this way. Siyabulela Nomoyi, portfolio manager, Satrix*, explains different asset classes and the roles they can play here.
- Set realistic goals: Investing is not a ‘quick fix’, it needs a long-term strategy. Your research would likely have uncovered this fact. Markets go up and down, so you have to know what you're working towards and have the patience to stick at it to achieve them. This starts with defining your tolerance for riskier investments, which is guided by your investment horizon - or how long you plan to stay invested for. Stay focused on your objectives - this will help you avoid unnecessary risks or reactive decision-making.
- Stay informed with market insights: Markets often react to good and bad news – wars, interest rate hikes, elections, and load shedding can all affect the financial markets. Knowing what is happening locally and globally will give you insight into why your investments may be going up or down. But since you have taken notice of point three, you should know your own goals and strategy well enough to avoid emotional reactions to market fluctuations and stay focused on your long-term goals.
- Keep your guard up: Remember, the old saying "if it sounds too good to be true, it probably is" – this holds very true for investments. Unfortunately, there are unscrupulous scammers and fraudsters operating in the world. Be vigilant. Make sure you only invest with an authorised financial services provider which is regulated and monitored by relevant authorities. Do thorough research before making any capital investments.
In part two of this article, we are drawing on lessons from those investors who have gone before you. Those that have learned the hard way, so you don’t need to. Here are their top five lessons:
Lesson One: Own the Market
One crucial lesson from successful investors is to own the market. What does this mean? It means, ’just start’. As soon as you start your investment journey, you’ll be on your way to owning the market! Whether small or big, if you aren’t invested, you won’t get returns. Over the past 90 years, the S&P 500 has delivered an average annual return of 10% after adjusting for inflation. By using the rule of 72 (72 divided by the annualised return), we find that investors in the S&P 500 have doubled their money approximately every 7.2 years! A good reason to own the market.
Lesson Two: Fail to plan, plan to fail
Planning is key when it comes to investing. Start by setting short-, medium-, and long-term financial goals. Once you have defined your objectives, craft a strategy that aligns with them.
Lesson Three: Stay the course, Captain
Patience is a virtue in investing. The longer you stay invested, the more your wealth can grow thanks to the power of compounding growth. Market volatility may tempt you to make impulsive decisions, but it's important to stay the course and avoid emotional reactions. Keep your long-term goals in mind and resist the urge to make frequent changes to your investment portfolio.
Lesson Four: Pay yourself first
Don't wait until the end of the month to invest whatever is left over. Instead, set up a monthly debit order and allocate as much as you can afford towards your investments. Even if it's a small amount, such as R10 a month, consistent investments can accumulate over time and snowball into significant figures.
Lesson Five: Pay it forward
Investing is not only a great way to grow your own wealth, it is also a powerful tool to pay it forward and positively impact the lives of others. One way to do this is by introducing other people, including your kids, to the world of investing. By sharing your knowledge and experience, you can empower them to make informed financial decisions and set them on a path towards financial independence. Read our article on how to invest on behalf of your children or dependants for more information on getting your younger loved ones started!
Investing responsibly can help you make more money with your money. We offer a breadth of investment options, all via easy online access through SatrixNOW and with no minimum investment requirements. Start investing responsibly with Satrix today and set yourself on the path to financial success. Happy investing!
*Satrix, a division of Sanlam Investment Management
Satrix Investments (Pty) Ltd is an approved FSP in term of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision.
Satrix Managers (RF) (Pty) Ltd (Satrix) a registered and approved Manager in Collective Investment Schemes in Securities.
While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.