The most basic investment is the cash in your pocket.  Put it in a bank and you gain the interest on offer to see it grow.  But will it beat inflation over the long term or is it really a wasting asset?  Though it is a basic investment is probably the most traded item in the world and you can have various types of cash investments such as Treasury bills, Call deposits, Notice deposits, Bankers acceptances, Promissory notes and Negotiable certificates of deposits (NCD’s).



Financial Bonds

Bonds are traded in what is called the Capital Market.  Bonds are really loans that you make to the institution that issues the bond.  The three main areas in which bonds are issues are the private sector, whereby a company will issue a long term bond to raise funds for a long term project, the central government, this is regarded at the safest investment you can make as the government is always viewed as the most likely to pay back the capital, and municipalities and public corporations which issue bonds to finance long term expansion projects.

As a rule the capital value of a bond will rise when interest rates come down and will realise losses when rates go up.  If you hold the bond to maturity you will receive all of your capital back making this the main investment for pension funds to fund their responsibilities to members receiving pensions on a monthly basis.


Apart from the house you live in any other property can be seen as an investment.  Property is always seen as solid investment as we all need a place to live and a place to do business.  It has returns from rental income as well as capital growth from the effects of inflation on the price of new buildings.  Location is also important and can push up value, or destroy it, as the area changes.  From an investment perspective we focus mainly on commercial property, office blocks and shopping malls, where we feel that good rentals will be consistent in the years ahead and the area will remain in strong demand.

Property is affected by moving interest rates however so is not as low risk as many people might think and needs to be carefully considered prior to adding it to your portfolio.

Property Investment



Having equity in something means you have some ownership so shares, as bought on the Johannesburg Stock Exchange, (JSE) are the main form of equity investments that we will make.  By buying a share in a company that is listed on the JSE you have the right to the cash dividend that it may pay out from time to time as well as the right to attend the annual general meeting, ask questions and vote on issues.  Further you have the right to elect company directors and would share in any proceeds if a company were dissolved for any reason.

You can invest in shares directly online, through a stockbroker, a unit trust or some other form of managed portfolio.


Each of the above investments can be found overseas too so we like to recommend that clients diversify their portfolio by investing in the offshore market too.  This brings with it additional risk in the form of currency movement so you need to be aware of that at all times.

Offshore Investing


Hedge Fund Investing

These are higher risk portfolios that you may well consider for a portion of your funds as they can give much higher returns but you can also lose quite a bit if they get their market timing wrong.  Sometimes we can buy these portfolios and place a guarantee on them too.


The above are the basic building blocks of any investment we would recommend to you.  We first find out what your appetite for risk is, using a risk analysis questionnaire, and then we check your current assets & liabilities coupled to your current cash flow analysis so we can see what your lifestyle needs are like compared to what you might be able to afford should you retire now.

To put this into perspective low risk investments would be cash, followed by bonds then property before using equities and alternatives and hedges would be on the high-risk side.

Investment mix


Compound Returns

Being consistent in what you do goes a long way to making sure you can go through the ups and downs of any stock market but here are a few items to think about.

You need equities to give you the best chance of a better than inflation return year after year.  The table here reflecting the average returns of sectors over a hundred year period till 2001 supports this.  While the information may be over 10 years old it is a century of information smoothed out to an average, it cannot be far off even today.

Asset allocation is important and study after study shows this to be true.  In the US, Ibbotson and Associates undertake regular analysis of the performance of various funds and found that a staggering 90% of the return could be attributed to asset allocation!  Only 5% to actual stock picking, 2% to market timing and the remaining 2% was various factors bundled together.  So focusing on asset allocation is the most important part of our job with you by far.


Once we have been through the above process we will know one of two things about you, you will either have enough money to retire the way you really want to when you want to or, you won’t in which case you have to either work longer or cut your expenses to match your income.

As a rule of thumb we believe you can only safely spend 6% per annum of your accumulated investable capital, which means around R5 000 per month for every R1m you have invested.  Lets assume you need R15 000 per month and you have R4m in investable capital.  We would have you look at your funds like this:

Investment example

Not everyone invests the same but the principles of investing remain similar regardless.

Once you have secured enough funds to sustain your lifestyle for the rest of your life, excess capital can be invested with a longer time horizon.

We do not recommend giving away funds early however, conditions change and you need to remain flexible to change with them.

Once we have established your needs we can move onto how to invest it properly.


There are many options such as annuities and unit trusts, that is the type of investment vehicle and that will depend very much on what you have established yourself over the years.  What we are talking about here is the underlying investment portfolio and how to construct that to ensure your funds last as long as you do.

Spreading your investment over various asset classes is called diversification, which is the most important strategy you will hear about, this reduces risk of failure considerably.  You can split the above up more by adding different classifications such as International or split the Equity into sub groups such as Financials, Industrials and Resources.

Asset Mix

Taking the above a step further we recommend various fund managers are utilised to further reduce bias risk that using a single fund manager or asset management house would bring to your portfolio.

All of this will assist you in providing for your retirement and ensuring you it is as peaceful as you had hoped it would be.

For more information please arrange a consultation with one of our advisors at your earliest convenience.

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