Floris Slabbert, national sales manager of Ecsponent Financial Services, talks about the latest market developments and how one creates an investment plan.

What happened in the markets this past week?

  • An interesting fact – the JSE’s electronic trading system is 20 years old today and interesting to note here is that when they started 20 years ago, the market capitalisation was R1 billion and today it stands at over R16 billion.
  • The JSE All Share Index closed lower at 52512 basis points, largely due to Fitch, the third largest credit rating agency, leaving South Africa’s credit rating unchanged.
  • The rand traded 1.2% better against the dollar, largely due to tomorrow’s announcement by the Federal Reserve Bank in America. We predict there won’t be any further rate hikes at this stage due to lower than expected employment rates and Britain’s referendum regarding membership to the European Union.
  • Amid uncertain international market conditions, gold is trading at $1 282 per fine ounce. Compared to the $1 205 per fine ounce on the first of June, this is an increase of 6%.

 

We often talk about creating an investment plan, but how do you go about putting such a plan together?

Start with the right foundation. As basic requirements, you need a will and an emergency fund. The value of the latter will be influenced by factors such as whether you have medical aid, short term insurance, or life cover and disability cover. Investors should steer away from expensive debt or unnecessary debt such as credit cards and clothing accounts. A bigger house, a better car, expensive holidays- these are all very appealing in our forties when we should ideally be in the prime of our earning cycle, but try steer away from unnecessary debt.

Most importantly, don’t forget to revise your pension fund contributions in order to maintain your living standard by the time you retire. Your risk appetite plays a major role in making these financial decisions, as does the diversification of asset classes. The risk appetite and needs of a 20 year old differs substantially from that of a 40 or 50 year old, however, remember that it is never too late to start investing.

 

What advice would you give to a 40 or 50-year old who wants to start investing?

You can read more about Ecsponent’s recommended six ways to generate wealth in your forties and this would be great guideline for anyone interested in creating an investment plan to secure their financial future. Next week we will focus on how to flourish financially in your fifties as well as new wealth creating methods.