Sat Jun 24 12:17:04 SAST 2017

Invest early with clear goals

By Owen S Nkomo | 2017-02-14 14:43:31.0

One needs to avoid short-term distractions when investing and focus on the long-term goals instead.

We always emphasise the value of investing early and investing with clear and set goals and objectives.

Importantly, we emphasized the importance of getting adequate advice from a highly qualified and experienced wealth manager. With the above being in place, one would clearly be on track to achieve good investment returns in the long run.

Let's reiterate one very important element of investing, which has helped many "developed investors" - people who have been exposed to investing for a long time and have had vast choices when it came to products and services - who now understand the importance of things such as costs of investing and the importance of a diversified portfolio.

We want to emphasise here that people who are investing in the market, need to invest for a longer period of time to enjoy the following benefits:

l An ability to reconsider your investment strategy against your long-term goals, which cannot be effectively analysed over a short period of time.

l Benefitting from the ability of markets to correct themselves after a long recession.

Here, one must be guided by the fact that many recessions last only 16 months to two years, at most. Therefore, should this happen during your investment horizon, you need to remain patient and committed to your long-term goals.

For example, if you are saving for your child's high school education, and they are only five years old, it makes no sense to pull out of the investment due to poor markets. Instead stay focused and keep your investment plan in place, and perhaps even increase your investment contribution during periods when the market falls. This will help you benefit from lower price averages of the units or investments you buy.

l More importantly, you need to benefit from "compound interest", or "compound investment returns". This is explained simply as "the result of investing one rand, and getting 10 cents or 10% return, then getting a return on the 10% as well". In other words, it is "like owning a cow that has a calf and the calf also gives birth to another calf and so on and so on".

The above is very important when investing, but remember that it all starts with getting good quality advice.

Contact us on 087 160 0018, or invest@iwgsa.co.za for more advice.

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