Africa-Press – Eswatini. Old Mutual Portfolio Manager Peter Brooke has urged Emaswati to inculcate the culture of investing.
Brooke said this when presenting on ‘Surviving the Russia-Ukraine war: Business Perspective’ at the Asset Management Thought Leadership Forum organised by Old Mutual. The event was held at Happy Valley Hotel yesterday.
“We have come to realise that all people are searching the needs to live a culture of saving and investing. It is a culture that we must develop. Developing a culture is no one likes. It takes time,” Brooke stated.
He said it was important for people to invest. He went on to explain that the main reason investors prefer cash to equities was the fear of losing money.
“The best way to manage the risk of losing money is to remain invested in equities for longer. As soon as you extend your holding period for more than three years, SA equity past performance shows that the chance of losing money becomes negligible.
Take what happened in 2008, after a negative 30 per cent return, the market rebounded to deliver 14 per cent a year over the following five years,” Brooke explained.
He mentioned that the reality was that many investors suffer from “inflation illusion” as they do not notice how destructive inflation can be over time.
Brooke said there was a need to look at long-term investment returns in “real” terms, stripping out the impact of inflation.
Many investors according to Brooke will not retire with enough money and therefore there was a need for the higher long-term returns from equities to grow wealth. He said this was particularly important in a world where people live longer.
“Equities may have been the best performing asset class since 1930 but cash was the best performer for 11 of those 92 years and listed property for nine years. Diversification is the one free lunch in investments; use it.
That is because it pays to invest across different asset classes. It pays to diversify and you can see the consistent, above-average returns of the diversified MacroSolutions Balanced Index over time relative to other individual asset classes,” Brookes stated.
Brooke advised individuals to start saving as soon as they can, leave it for as long as they can and let compounding do the work for them. And tick the dividend reinvest box on their investment application form to maximise growth.
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