The COVID-19 pandemic has highlighted the need for emergency savings as a buffer against tough times, but it has also created anxiety and uncertainty for those worried about job security and market volatility, causing some to sit on extra cash that would normally be invested. According to Nomi Bodlani, head of Strategic Markets at Allan Gray, investors can use these times to make adequate preparations for a financially fit future.
“Although there is little evidence of what habits South African investors will adopt post-pandemic, especially in light of an ailing economy and dismal household savings rate, consumer spending is likely to be fundamentally different for many months to come, and so too will people’s spending and saving habits,” Bodlani states.
She explains that while it is understandable that investors are shying away from risk at this time, in an environment of lower interest rates, investors looking for long-term growth need to make sure that a portion of their portfolio is exposed to growth assets, such as equities, which have proven to deliver growth over the long term. “The other piece of the puzzle not to overlook is an element of offshore exposure,” she advises.
Click here to read more about why, in an environment with lower interest rates, it is important to still include equities in your investment strategy as well as how to get offshore exposure and why it is important.
