By: deVere Acuma
A “rapidly growing” number of investors across South Africa are looking at international opportunities in light of the “incredible uncertainty” due to the many political and economic challenges facing the country.
This is the recent finding of deVere Acuma, part of the world’s largest independent financial advisory organisation, as reported today.
Gavin Smith, Head of Africa at deVere Acuma says, “As a company we work with clients across a comprehensive range of financial planning matters in order to help them achieve, and hopefully exceed, their long-term financial goals. Whilst we deal with them on all manner of issues from retirement and pension planning to foreign exchange, there’s been a striking trend over the last year.”
“A rapidly growing number of our clients have been increasingly telling our advisers over the past 12 months that they are becoming ever more concerned about the political and economic challenges facing South Africa and the incredible uncertainty that this creates,” Mr Smith continues.
“Specifically, they tell us that they believe the primary risks for their wealth include that the South African economy is expected to remain weak for the next few years at least, the plummeting and volatile rand, the controversial land expropriation issue, the possibility of another downgrade by ratings agencies, and the increasing likelihood of at least another two tax increases next year.
“As such – and perhaps understandably – they are looking at international options, such as efficient overseas property investments, to help build and safeguard their wealth.
“In general, the investors flagging up these concerns are not only the uber rich, they are also hardworking, middle class families looking for better protection, better returns, and more flexibility.”
Mr Smith goes on to add, “In these times of growing volatility, the need for diversification of assets by asset class, geography and legal jurisdiction is paramount.
“The two main factors needed to achieve good long-term returns are the same for South African-based investors as they are for anyone else.
“First, a diversified asset mix that limits volatility. That’s to say, the risk that your portfolio falls suddenly, just before you need the money.
“And second is patience, or having ‘time in the market.’ This allows the build up of compound returns while minimising leakage of cash to stock brokers, and avoids the risk of trying to time the market which too often results in buying high and selling low by following herd instinct.”
deVere Acuma’s Head of Africa concludes that, “Fortunately, there are many well-established, bona fide financial solutions to help investors mitigate the current and growing headwinds which are likely to remain for several years to come.”