Basic pointers for investing successfully

Your investment choices depend on your investment goals, and your investment goals depend on your personal priorities. There is no generic recipe that applies to everyone. Although some of our goals may be similar, each of us has a different timeline and risk profile and must contend with different personal circumstances, and our portfolios need to be constructed accordingly. That said, here are a few general pointers to bear in mind when investing.

Make conscious choices

Understanding how much risk you are comfortable taking on and what return, ideally, you need to earn, and investing accordingly, is key to enabling you to remain disciplined and committed to your investment plan. This can be difficult at times: between the fear of losing hard-earned money and the fear of missing out on a great opportunity, it is understandable that many investors become distracted along the way and have the urge to chop and change their investments.

It is easier to stay committed to your long-term plan if you make conscious choices based on your personal profile. A financial adviser can help to tailor your investments to suit your characteristics and objectives and ensure that you have a diversified portfolio that caters for your short-term and long-term goals.

Adopt a long-term approach

A changing environment should not make you panic if you have chosen the right fund with a long-term track record of performing through the cycles, or created a portfolio that is well diversified across currencies and asset classes.

A diversified portfolio limits the risk of permanent capital loss, but still maximises the probability of real (after-inflation) returns, even in a low-return environment. 

Of course, it is important to review your portfolio regularly, but guard against making investment decisions that are a reaction to market news and movements.  

It is clear that we are in a period of uncertainty, but investors must try to remain calm, tune out the market noise, and continue investing in line with their objectives and risk tolerance. You can end up destroying a lot of value if you second-guess your investment strategy based on short-term news.

If your portfolio includes holdings in well-diversified businesses whose earnings are generated offshore and not in South Africa, there is a good chance that the fund in which you are invested is well positioned to withstand changes in market sentiment.

Avoid dipping into the cookie jar 

Guard against dipping into your retirement savings when you change jobs, unless you absolutely have no choice. Not preserving your retirement savings sets you back more than you think: not only will you have to start all over again, but you will also miss out on the full power of compound interest.

A small investment made early in your working life will deliver so much more than a larger investment made later, making the first 10 years far more important than the last. For example, if one person invests R1 000 a month for the first 10 years of his or her working life and then stops, but remains invested for the next 30 years (a total of R120 000 in contributions), and another invests R1 000 a month for the last 30 years of his or her working life (a total of R360 000 in contributions), they will both end up with the same amount at the end of 40 years. 

Avoid switching indiscriminately 

When your unit trust fund does not perform as well as you would like, or if there is a period of extreme volatility in the market, you may be tempted to sell one fund and buy another, otherwise known as “switching”. 

Switching when the market has dipped can destroy the value of your investment. Timing the market correctly is extremely difficult, and responding emotionally may take you much further from your investment goal. 

Do careful homework at the outset to make sure you pick an investment you are comfortable sticking with. Give your investment manager the opportunity to make your money work for you. You should change your portfolio when your investment objectives have changed, not in response to market movements.


Know your goals, choose what is going to be right for you and avoid these basic mistakes. If you find the decision-making process too complex or daunting, consider talking to an independent financial adviser.

Jeanette Marais is a director of Allan Gray, responsible for retail distribution and client service. 

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