With Great Opportunity Comes Great Responsibility


Investors, like superheroes, need to have a clear guiding principles and methods to achieving their goals. We share nine in this article. 

Superheroes know their limits. Mastering their powers mean testing what they’re capable of. Similarly, to Superman or Wonder Woman, investors need to understand themselves and their personal risk profiles, grasp the market and its movements, and understand asset classes to optimise returns. 

Investing can be the ultimate way to make your money work harder for you. But with that opportunity comes great responsibility. You need knowledge, a plan, and an arsenal of tools to make the best possible decisions.

Here, René Basson, Head of Brand at Satrix, South Africa’s leading index tracking provider, shares some 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 reliable information available online, in books, videos, via podcasts, the list goes on. Be curious, ask questions, and set aside time to learn. The greater your understanding of investing – from a personal finance and technical perspective, the more informed and responsible your decision-making is likely to be.
     
  • Own the Market: Superman took the leap. Investors should as well. Owning the market means starting the journey. Just start. Whether small or big, if you aren’t invested, you won’t get returns. Over the past 100 years, the S&P 500  has delivered an average annual return of 7.4% after adjusting for inflation. 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 9.7 years! That’s a good reason to own the market.
     
  • 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. Work with a financial adviser if you need a partner to put the building blocks in place.
     
  • Don't Put All Your Eggs in One Basket: Diversification is an important strategy for risk management. Spread your investments across different asset classes, sectors, and regions. Satrix offers funds that are diversified in exactly this way.
     
  • Set Realistic Goals: Investing is a long-term game. Markets go up and down, so you have to know what you're working towards and have the patience to stick with your strategy. 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.  The longer you stay invested, the more you build your wealth, thanks to the power of compounding growth. Market volatility may tempt you to make impulsive decisions, but it's important to stay the course. Keep your long-term goals in mind and resist the urge to make frequent changes to your portfolio.
     
  • Stay Informed with Market Insights: Markets are constantly reacting to macroeconomic factors such as wars, interest rate hikes, elections, and load shedding. Knowing what is happening locally and globally will give you insight into why your investments may be fluctuating. Remind yourself of your investment goals to avoid making impulsive decisions to market fluctuations.
     
  • 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, unscrupulous scammers and fraudsters are operating everywhere. Be hyper-vigilant of any ‘get rich overnight’ schemes. Make sure you only invest with an authorised financial services provider that is regulated and monitored by relevant authorities. Before you make any capital investments you can check whether a provider is registered with the Financial Services Conduct Authority (FSCA). Satrix will never invest on your behalf, so if you receive any random WhatsApp or Telegram messages, don’t fall for it.
     
  • 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 towards your investments. Even if it's a small amount – as little R10 a month – consistent investments can accumulate over time and snowball into significant figures.
     
  • Share Your Superpowers: Investing is not only a great way to grow your own wealth, but 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. 
     

Disclosure

Satrix Investments (Pty) Ltd is an approved FSP in terms 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) is 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.