Investments beneficial over long run

2017-06-28 06:02

South Africans are advised to continue investing and not be discouraged by rating agencies’ downgrading of the country.

Aneesa Razack, chief executive officer of FNB Share Investing, said though the market goes through periods of vola­tility, there is never reason enough not to stay invested.

South African markets have gone through periods of volatility previously, most notably during the global financial meltdown of 2008 and the end “Dot Com Bubble” when markets dropped significantly. While the latest downgrades can be a cause for concern for local investors, this should not deter anyone from continuing to invest. Over the long term, the market corrects itself and slowly returns to a growth trajectory.

“The worst thing any investor can do is to decide to pull out completely; nothing could be more regressive.”

According to Razack, the downgrades present opportunity to invest with spin-offs later.

“Imagine someone who invested money back in 2008 when the market suffered the worst downturn. Over the years, they reaped some rewards as the market recovered. While market volatility poses risks, there are also investing opportunities that may be beneficial over the long run. To illustrate, from April 2009 to April 2017, the JSE All Share has grown by more than 160%, so if investors had pulled out their investments, they would have lost out on significant returns from the market

Razack advised potential investors to consider buying cheap shares.

When the market suffers a downturn, some shares may be cheaper to buy. This not only allows you to bolster your portfolio, it is also an opportunity for better growth prospects when the market recovers.”

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