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Last month, US headline inflation recorded its biggest single jump in 13 years with a 5% gain from May 2020. In the wake of the global pandemic, rising vehicle prices, flight tickets, car insurance and hotels reflect a recovery in travel and higher oil prices.
When investing, sometimes the best course of action is to do nothing. Having the ability to block out the noise, and look through the cycle, are some of the cornerstones to investment success over the long term. But what else sets successful investors apart?
Generating long-term economic growth and employment is the most sustainable way to boost tax revenues and stabilise the debt-to-GDP ratio, especially if augmented by the reduction in government spending and the restructuring of spending towards investment.
A year ago, reality started sinking in that the new coronavirus from Wuhan would not be contained to China. No fewer than 25 countries had confirmed cases, and the first deaths outside China were being reported. On 11 February 2020, the disease caused by the new coronavirus was named COVID-19.
2020 challenged all of us. The most severe economic contraction in decades triggered vast monetary accommodation and fiscal support packages that altered the investment landscape. Now, as we approach 2021, the promise of COVID-19 vaccines is game changing. It encourages us to anticipate a return to pre-pandemic activities.
Welcome to the ‘new normal’, they say. You see, something’s always considered the ‘new normal’ until yet another ‘new normal’ comes along. Granted, at times, the ‘new normal’ does actually stick. However, most of the time, it’s just noise and like the doppler effect, it will soon fade away.
In times of uncertainty, investors typically flock to safe haven assets, gold probably being one of the most known and talked about. This year alone has seen the price of gold soar nearly 19% as investors seek diversification from more traditional assets like stocks, bonds, or property.
Following the news of last week’s assassination of Qassem Soleimani, the head of the Iranian Revolutionary Guards’ overseas forces, South African Finance Minister Mboweni took to social media in a series of tweets stating that escalating tensions between the US and Iran will negatively impact on the global economy, including the South African economy.
Rising global headwinds, heightened market volatility and the growing threat of a global recession mean that, as we approach the end of the current economic cycle, ensuring that your investment portfolio has the appropriate safety measures in place is more important than ever. But while we’ve all heard the adage that the key to managing risk is diversification, the truth is that this is only half the story.
With all the uncertainty in the South African market and concerns about future investment returns, many investors are looking offshore for investment opportunities. A diversified investment portfolio is always a good strategy when saving for retirement but before you set off looking for greener pastures in offshore markets, take note of Regulation 28 and its integration in retirement annuity funds.
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