Save for the long-term

Isaac Moledi

Isaac Moledi

Investors should focus more on longer-term investment principles during increased market volatility than listening to short-term market noise.

Donny Bruce, business development manager at Old Mutual Investment Group, says that by focusing too much on the short-term, investors allow themselves to become consumed by short-term market moves and lose track of sticking to their longer-term investment plans.

He explains that when markets are volatile, investors tend to be biased towards lower risk investments, like cash.

"Given the volatile, tough market and economic conditions, the thought of investing scares people," says Bruce, adding that dreams don't come cheap.

"Reward down the line comes as a result of sacrifice today," he says.

He acknowledges that it has become tough to invest.

"To complicate matters, the recent spate of higher food prices, fuel prices and the increased cost of debt has put further pressure on the consumer."

Bruce's investment principles to invest successfully and grow wealth:

l Diversify: Don't put all your eggs in one basket.

l Cash is unlikely to outpace inflation in the long-term. Short-term, cash returns look attractive but there's always an opportunity cost staying invested in cash over time.

l Over the past five, 10, 15 and 20 years, growth assets (property and equities) have been the top performers.

l Cash does not offer a growing income stream so longer-term investors should be wary of an over-exposure to cash.

l The value of advice: Investing starts with a plan. One must have a retirement goal to strive towards, otherwise you may find yourself reaching retirement with insufficient retirement capital.