There are plenty of gimmicky little phrases in English that essentially tell us the same thing: stay the course. “Keep calm and carry on”, said the English wartime propaganda poster. “If you’re going through hell, keep going”, is something Winston Churchill said to chivvy up the populace during the same war. “The greatest glory in living lies not in never falling, but in rising every time we fall,” was Nelson Mandela’s celebrated view on perseverance.
In military strategy, the remaining calm under fire is regarded as essential to making effective decisions, and in the fraught state of South Africa’s political economy, this has seldom been a more valuable truth for investors and their asset managers.
It’s critical for sober people to step away from the unhelpful noise around the economy and to keep focused. If you have a pension with your employer, or privately, or a life policy, then you are an investor. You’re invested in the JSE, the bond market and probably overseas as well and, if your investments are soundly and actively managed, then keeping calm and carrying on is most likely your best option.
Responsible and active asset managers take a highly critical and long-term view on global macro-economic indicators. Old Mutual Investment Group recently released its fourth annual report, Long-Term Perspectives 2017. The document underlines the critical importance of a long-term view and diversification in a balanced portfolio. The turmoil in South African markets and politics merely serves to illustrate the point. There is no risk-free investment, but diversity over the longer term mitigates your risk exposure.
Further lessons for ordinary investors in Long-Term Perspectives 2017 are enormously useful. The concomitant necessity of measuring long-term returns after stripping out the impact of inflation is one of them.
Further, two interlinked learnings; equities are important in any diversified portfolio, but as important is to choose the right equities and to remain invested for the long-term. Staying the course with equities is an important decision on the path to good returns. An additional lesson along the same lines is to get into the market as soon as you can, and to enjoy the compound growth by asking your asset manager to re-invest your returns as they come in.
Turbulent politics and related economic uncertainty is a quite understandable cause for anxiety. However, economic uncertainty is an intermittent yet regular feature of life globally, and a committed and active asset manager should have systems in place protect your wealth during volatile times. It’s your future prosperity and your money, and your asset managers are being paid to look after it – so you’re more than within your rights to get in touch with your financial advisor for advice on what measures you ought to be taking in these difficult times. You’ll probably find it a reassuring conversation.
Click here to download the 2017 Long-term perspectives report