Stability doesn’t always have to come at a cost

With the cosmic game of Jenga that global markets have been playing for the past three years, it’s reasonable to be rattled about investment instability.

Investors are finding it more difficult to spot attractive investment opportunities that will deliver secure, acceptable returns. Even the so-called equity ‘golden oldies’ no longer deliver consistently on investor expectations.

This prompts investors to question the overall viability of investments, but perhaps that line of questioning should be extended to investment strategies, and maybe even the way we assess investment options too. It’s probably time to rethink our existing investment perceptions and expectations and explore fresh ways to preserve capital, generate income and build wealth.

Traditional Thinking

Back in the day, portfolios were typically constructed by cherry-picking equities and bonds from the JSE and allocating them based on risk appetite, leaving investors to sit back and watch yields climb. Growth was the focus, and for the most part, stability lay simply in selecting a collection of traditional, albeit unimaginative, top performing assets, and ensuring they were stacked securely.

With little disruption to worry about, there was no compelling reason to look beyond the tried and trusted with few even thinking about alternative investment options. So, investors and their financial advisors continued to look forward to the annual portfolio review lunch, confident they’d be breaking out the good stuff.

But a new pattern had already started emerging by the time COVID-19 hit. It has since become undeniable and the corks have stopped popping. As conventional investment strategies failed to deliver the expected returns, the mutual backslapping quickly morphed into the Heimlich maneuver, and several critical shortcomings were revealed.

• One, the misplaced belief that a Jenga tower built exclusively from the JSE’s top stocks and bonds could be an effective bulwark against market instability;
• two, the reluctance to accept that a properly balanced portfolio should include a diversified range of investments beyond just the familiar; and,
• three, the blinkers that resulted in many overlooking the potential of including alternative asset classes and fixed investments in balanced portfolios. Especially in rocky times.

Best of both worlds

Much like a real-life Jenga game, you need proper planning and a good mix of pieces in the right places. And much like with your investment portfolio, if you lean too heavily in any one direction, the slightest bump of the table will send the whole thing tumbling. It’s all about balance.

This approach has served Fedgroup well over the years by balancing innovation with a foundation of tried and tested financial wisdom to offer investors the best of both worlds.

With an unblemished track record of the performance of our fixed investments and a pioneering spirit, we’ve shown that it’s possible to constantly challenge industry norms for the benefit of investors. The result? Smooth investment journeys for investors and a consistent delivery on their financial security and growth objectives by incorporating innovative and competitive investment solutions into their portfolios.

How is this possible, you might ask?

Through a combination of fixed-term investments that could withstand a battering even when more traditional assets in investor portfolios might be reeling, providing a stable foundation, no matter the level of market volatility.

This approach to stability is rooted in the simple truth that, even the most aggressive investor, in the most bullish of markets, wants reassurance that a portion of their money is safe. And that’s truer still when the bears come out of hibernation, ready to deliver a COVID-sized klap.

This level of security is provided by fixed investments like our Secured Investment – and the more recently launched Fixed Endowment. They are perfectly positioned to offer investors certainty, from day one, of the exact returns they’ll receive at the end of the fixed term – making them great investment products regardless of whether you’re new to investing or an experienced, qualified investor.

For more information, visit the Fedgroup website.