Building Long Term Wealth

Investing is a powerful way to grow wealth beyond what savings accounts offer. For beginners, start with education and caution, then gradually increase risk tolerance as you learn.

Key options for South Africans include exchange-traded funds (ETFs), local stocks, unit trusts, and government bonds. Never in history has information been this freely available as it is now on how investment products are structured, and there are fast amounts of literature out there.

Some investment instruments to consider:

• Stock Market & ETFs: Consider low-fee ETFs that track broad indices both locally and abroad (like the Top 40 index) for instant diversification. According to local experts, the JSE All Share Index has historically returned 12%/yr over 25 years (though past performance is no guarantee). ETFs can also cover international bonds or international stocks, or even have more complex holdings.

• Property Investment: South African homes can be lucrative one over time, but markets are cooling. A 2024 report showed 20% fewer property transactions in 2023, largely due to higher interest rates​housingfinanceafrica.org. However, with 76% of homes valued under R1.2 million​housingfinanceafrica.org, entry-level housing is relatively affordable for first-time buyers. Decide if you want a rental income or capital growth, and always account for maintenance costs, levies, rates and taxes etc. to determine your true rate of return.

• Bonds and Fixed Deposits: The SA government offers retail bonds up to 10.25% over 5 years​ratecompare.co.za, which can be a safe anchor for your portfolio. Some banks offer ~8–9% on fixed deposits or notice accounts as well. These provide steady returns with low risk (ideal for capital preservation).

• Diversification: Don’t put all eggs in one basket. A mix of equities (growth), bonds (stability), and cash (liquidity) tailored to your goals/risk level is recommended. Young investors might hold more stocks, while retirees may prefer more bonds.

Remember, markets fluctuate – avoid panic selling on short-term dips. In fact, inflation has recently eased (CPI was 2.7% in March 2025​reuters.com), which could support long-term returns. But always do research or consult experts before investing. It must be noted that a well diversified portfolio would mitigate any potential fluctuations within any investment portfolio.

Investing for multiple life stages: A young professional may prioritize growth-oriented assets, while a retiree might seek income (e.g. dividend-yielding funds) and capital preservation.

Adjust your portfolio as you age – a common rule is to reduce stock exposure by your age (e.g., 30% equities at age 70). But again it should be stressed that your should consult with an expert to discuss your individual requirements.

If you are serious about creating a brighter, better future, why not give us a call for an obligation free consultation?

Your Financial Planning Partner.