Six steps to build your wealth
Markets are sometimes unstable and unpredictable. That's why it's so important to have a well developed, disciplined investment strategy. Here are six principles to follow throughout your investment journey.
1. The best time to start is today
Time is an investor's best friend. The earlier you start, the more returns you could earn. Starting sooner rather than later also means that your investments will have enough time to recover if there's a dip in the market.
2. Be patient
Time and patience go hand in hand. Investments, like plants, need time to grow and blossom. If you want to reap the rewards, you need to have faith and wait it out. Don't be tempted to change your plan just because someone else has had success in a different fund to yours. Remember, past performance doesn't guarantee future results.
3. Don't mistake saving for investing
People sometimes confuse saving and investing, but these two financial strategies serve different purposes. Saving is usually a more conservative approach that aims to preserve capital for short-term needs (a few months or between one and three years, for example). Investing involves taking on more risk to reach financial goals through long-term growth (for example, over 5, 10 or even 40 or more years - this is often how generational wealth builds).
Saving is good, but to build wealth for your and your family's future and to retire well, investing is key. Don't think you need a large lump sum to start investing - it takes a minimum of just R500 a month with Discovery Invest. Consistency goes a long way in investing, so even a small amount invested regularly can compound significantly over the years.
4. Diversify your portfolio
A diversified portfolio has investments in all the different asset classes. These investments can be based here in South Africa or abroad. Diversification, including offshore investing, is one of the best ways to reduce the overall risk of your portfolio.
5. Plan your asset allocation
Your financial adviser is your biggest ally when it comes to planning your asset allocation. They will help you decide how much to invest in cash, property, equities and bonds. This is also key to building a diversified portfolio. To do this, you will have to consider your goals, timeline and risk tolerance.
6. Review, review, review
Your investment portfolio is bound to change because your needs will change as you get older. This is a good incentive for reviewing your portfolio. Meet with your financial adviser to make sure that your portfolio stays at peak performance and that your investments are still working for you.
This document is meant only as information and should not be taken as financial advice. For tailored financial advice, please contact your financial adviser. Discovery Life Investment Services Pty (Ltd): Registration number 2007/005969/07, branded as Discovery Invest, is an authorised financial services provider. All life assurance products are underwritten by Discovery Life Ltd. Registration number: 1966/003901/06, a licensed life Insurer, an authorised financial service provider and registered credit provider, NCR registration number NCRCP3555. All boosts are offered through the insurer, Discovery Life Limited. The insurer reserves the right to review and change the qualifying requirements for boosts at any time. Product rules, terms and conditions apply.
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