By Wendy Myers, Head of Securities at PSG

Wendy Myers, Head of Securities at PSG, explores how individual investors can maximise their portfolio returns

As an investor, the goal isn’t just about boosting returns; it’s about doing so without torpedoing your portfolio in the process. That means resisting the temptation to throw everything into one hot stock just because everyone in your neighbourhood WhatsApp group is doing it. There are three foundational principles I always come back to: diversification, knowing your risk tolerance and harnessing the power of compounding.

Diversification sounds obvious, but it’s sometimes done poorly

Real diversification means spreading your investments across asset classes, sectors and geographies – not just picking five tech stocks and calling it a day. When done properly, diversification helps reduce risk and improve long-term performance. Importantly, it cushions your portfolio when one sector underperforms or global conditions shift.

Understanding your own risk appetite is essential

Before you even begin building your portfolio, you need to know how much volatility you can live with – and more importantly, how much you can lose without losing sleep. This involves some honest introspection: How much do you have to invest? What are your financial goals? What is your investment horizon?

Personally, I’ve always been a conservative investor. When Sasol was trading at two times earnings, I knew the upside was compelling – but I also knew I could only tolerate a 30% exposure from my cash buffer. That wasn’t part of my retirement or longer-term investments. The key was being comfortable with the risk. If Sasol had dropped another 10%, I’d have still been able to sleep at night. That, to me, is how you align emotion with logic.

Leverage compounding – and don’t interfere too often

Compounding isn’t just about interest. When you reinvest dividends and avoid unnecessary withdrawals, the effect on your portfolio over time can be remarkable. Too many investors forget this, especially when tempted to chase short-term gains.

Rebalancing is another area where restraint pays off. Do it, yes – but do it infrequently and with small, calculated adjustments. If a stock’s allocation has swelled well beyond its original weight in your portfolio, consider trimming it back and reallocating to something with more attractive value.

Avoid these common mistakes

Return-chasing strategies often lead to costly mistakes. I’ve seen too many investors go all-in on one share because of recent performance, only for the stock to crash – or flatline. The tech sector is a perfect example. Last year’s darlings have come down materially, and investors who didn’t diversify or who doubled down at the top are feeling the pain.

Another trap is relying on past performance as an indicator of future returns. Share prices are influenced by countless factors – economic policy shifts, geopolitical events and sentiment. A new administration in the US can change global market dynamics overnight.

Young investors, in particular, often err on the side of caution. But avoiding equities altogether when you have a long-term horizon can seriously limit your wealth-building potential. At the same time, mature investors should rebalance for lower volatility – ideally through a mix of equities, ETFs, bonds and cash.

Excessive trading is another red flag. Constant buying and selling racks up costs and often stems from emotional, not rational, decision-making. Similarly, reacting to headlines or market swings – like panic-selling after a dip – rarely ends well. I’ve seen investors exit positions like Renergen at the bottom, only for a buyout offer to send the price up 30 to 40% in days.

Some investors also fall into the trap of monitoring their portfolios too frequently. Constantly checking prices or reacting to every market dip often leads to unproductive tinkering or emotional trades. Most financial advisers recommend an annual review – which is generally enough unless your financial situation changes meaningfully.

Stop-loss orders fall into a similar category. They seem useful on paper – protecting the downside by triggering an automatic sale – but they can backfire. If a stock drops temporarily, your position might be closed out before a recovery, leaving you to miss out on a rebound while still incurring costs and tax liabilities. In most cases, selling decisions should be deliberate and informed by your long-term strategy, not automated reactions.

A trusted adviser makes all the difference

Too many investors think they can go it alone – they’ve watched a few YouTube videos, downloaded a sleek trading app and they’re ready to build a fortune. But successful investing requires more than enthusiasm.

A qualified adviser is an invaluable financial partner for those of us without the financial know-how or commitment to in depth daily research. They consider your full balance sheet, your estate planning needs, and your long-term goals. They help you stay disciplined and avoid knee-jerk decisions. Most importantly, they walk the journey with you – helping you invest with intention, so that when the time comes to retire, you can do so comfortably.

At the end of the day, maximising returns isn’t about swinging for the fences every time. It’s about patience and discipline – the unglamorous but essential stuff that keeps you from letting a WhatsApp group talk you into a meme stock.