The biggest challenge for investors in today’s volatile markets is to remain committed to their plans over the long term without letting fear or greed take over, says Standard Bank Wealth.
Head of Innovation at Standard Bank Wealth, Chris de Klerk, who has just returned from the “Woodstock for Capitalists” annual Berkshire Hathaway AGM in Omaha, Nebraska, says what resonated most from the AGM is the power of staying the course with a long-term investment strategy.
“It was a whirlwind trip over two days and an unbelievable experience. There were over 40,000 people in attendance and Warren Buffett and long-time friend and business partner, Charlie Munger, held the audience enthralled for over six hours. From the many insightful and astute remarks made by this vastly experienced duo, I felt a keen sense of how important it is to have a long-term financial plan and to stick to it through both good and difficult times,” says de Klerk.
His second key takeout was the importance of time – Warren Buffett has said on many occasions that he can buy almost anything but he can’t buy more time. It is important that people treasure and use their time wisely and also that they think very carefully about the investment decisions they make, as Warren Buffett does.
Global Head: Wealth Advisory at Standard Bank Group, Philip Faure, says one of the key ingredients to successful investing remains time in the market and not timing the market. “What stands out is while it can be very hard to ‘sit on your hands’ when there is so much negative news around, it remains crucial to be able to buy something at the right price and to be able to stick to it through the cycles that may come and go,” says Mr Faure.
The Berkshire Hathaway share has achieved almost iconic status with investors. To highlight how well you can do by backing winners like Berkshire: one ‘A’ class share in 1968 could have bought you 76 McDonald’s Big Macs. That same share today could pay for a four-year Harvard education worth $248,000!
Faure says one of the biggest challenges for investors is staying the course in investments - being committed to a plan and not reacting to the noise and distractions that pop up all the time, be they economic, political or social. “Sticking to well thought-out, long-term investment plans is what leads to success stories like Berkshire Hathaway”.
Greg Barclay, Head of International Personal Banking at Standard Bank Wealth, says it is a fallacy that global investing is just for the ultra-high nett worth.
“To diversify internationally you can invest directly in offshore funds or create a portfolio of foreign companies using a product like Webtrader, available today for all South Africans. But it is important to be aware everyone has different risk appetites and outcomes and you therefore need to invest for a goal. It ultimately depends on appetite and sophistication.” Barclay says diversification is dependent on future goals and aspirations and aligning to future liabilities.
Head of Advisory Services at Standard Bank Financial Consultancy, Errol Meyer, says all South Africans can build wealth today by harnessing a goals-based plan which matches assets and liabilities.
“Assets must be able to earn an income and then you can decide whether you want to enjoy that or to leave a legacy,” says Mr Meyer.
Decisions like choosing an RA, tax free investment or just a unit trust become very important when weighing up goals and giving purpose to wealth created – you need wisdom to do that.
“Education is crucial but the reality is all South Africans have the ability to build wealth for themselves and future generations if they stick to a long-term plan that can meet their goals and regularly review that plan with a trusted financial planner,” says Mr Meyer.
Standard Bank’s professional wealth advisors are ready to assist you by creating a financial plan that will build your wealth in line with your goals and dreams. To find out more SMS “Advice” to 31791 or CLICK HERE [hyperlink to www.standardbank.co.za/financialplanning].
