Is it Still Worth Investing in South Africa?

I am sure that the recent changes in the South African cabinet, the 0.25% US interest rate hike, and the news that Fitch Ratings has cut our current outlook and economy to “junk” status has put considerable strain on your end-of-year holiday mind set.

Based on this rating, it will cost the South African reserve bank more than before to borrow from the World Bank. Furthermore, this rating has inspired doubt and a lack of confidence amongst foreign investors, which negatively impacts the markets due to outflows of money to these investors’ respective countries.

But, this is something that re-appointed finance minister, Mr. Pravin Gordhan, is now working on as he assured us as the beginning of the week.

This is the time to take advantage of what the markets are offering us at this point…. which is value.

I wanted to drop you one last mail for the year to let you know that it’s okay. You can breathe. You can relax and enjoy your holiday, confident in the knowledge that your current and future investments will be safe.

The reason I say this is as follows:

2007/8, at the peak of the recession, that was, in fact, the best time to invest more money. Investors made exponential returns when the market started to climb.

The JSE is currently trading at just above 48 000 points, which came in from a high of 58 000 earlier this year. This means that the market is showing a lot of value and is not trading at a lower price-to-earnings ratio

That means that this is an ideal time to invest more into the market, which will have a positive outcome in future. Take a long-term view when it comes to your investments and you will see that, historically, the market has always climbed in value.

Don’t make impulse decisions that could negatively affect your investments (like withdrawing unnecessarily) at this point. Ride it out. Remember: there are no losses until you move out of the market at a low.

If you already have existing investments, the best thing to do at this point is to stay put. As I always emphasize, think with your head and not with your heart.

If you have any questions about your investments, please drop me a mail.

If you want to take advantage of this opportunity, and want to know how much to invest, let me know, so that we can price the money in at the right time before the market climbs again.

Have a safe and fulfilling festive season. Take regular breaks if you’re driving, and don’t rush. On the road, as in life, the trick is to enjoy the journey as much as the destination.

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