A common question asked by investors is: Given the numerous uncertainties (volatile equity markets, weak rand, rising interest rates and generally slow growth) should I invest now or wait and see what happens?
This question was posed to John Kinsley – MD of Prudential Unit Trusts, the top two rated Morningstar fund manager.
His summarised response is:
- Investing always involves risk. Waiting only represents an opportunity cost as cash is not earning additional returns.
- A long-term investment horizon is necessary for investing in equities. There can be short-term losses but longer-term returns are smoothed.
- The starting price is critical to your overall return, but since it is impossible to “pick the bottom” of the market to get the very cheapest price, you can take comfort that the longer you stay in the market, the greater the compounding of your returns. Equities have offered the highest long-term returns over time.
The article also provides a good market overview. Please click here to read Table Talk – Investment Conditions.