Investing in the face of uncertainty

The future state of our economy is looking very uncertain. I am a young female and would like to start investing. I know that with this comes various risks, so I am cautious about where to put my money. My goal is to work towards long-term investments to secure my financial future. Which investments are best to buy now, as a beginner and how can I prepare myself for unexpected risks, and how does retirement planning fit in as part of this broader plan?

Name withheld

Jac De Wet, Wealth Manager at PSG Wealth, Somerset West, responds: Investing is loaded with

uncertainty, but if you approach it sensibly and plan appropriately, the uncertainty and risks can be managed and mitigated to achieve your investment goals.

Investing towards longterm goals generally means that investors can take more investment risk, with a greater portion of the portfolio allocated to growth assets, like shares. History shows that shares have outperformed most other asset classes over time.

However, the higher the expected return, the higher the potential risks and volatility, particularly over the short term. You can prepare yourself by

understanding that it is often more important to manage your behaviour and emotions rather than your investments.

Investment products you may find suitable for your needs include (and I focus on investment products designed to benefit you over the long term): retirement annuity (RA), tax-free savings account (TFSA), voluntary investment, or share portfolio. These products all have underlying funds, or other investment instruments. This is where your money is actually invested.

Since you are young and have a long investment horizon (and assuming your risk tolerance allows it), it could be beneficial to invest in as many growth assets as possible in the underlying funds or investment instruments.

Retirement planning is an important aspect that is often overlooked, and very few people actually have enough to retire comfortably.

There are various investment vehicles available to invest for retirement. You/your employer may be investing in a pension or provident fund for you. If you are not contributing to a pension or provident fund, you can make use of an RA.

By contributing to an RA, investors can take advantage of the tax deductibility of the contributions, subject to various rules, regulations and limits.

Another long-term savings vehicle is a TFSA.

All the growth in this investment happens tax free. Investors are allowed to contribute a maximum of

R36 000 per tax year and R500 000 over their lifetime, to a TFSA.

While we can give you some insights as to what investments are available to you, the information provided in the question is not sufficient to give proper advice. When starting your investment journey it is always advised that you speak to a qualified and trusted financial planner to assist you.