The current market is proving tricky for many investors. Cash has provided a good level of income over the last two years but with interest rates falling from 15.5% to 10.5% this is forcing many investors to reconsider their investments. Property yields have also fallen and are taking strain with increased costs and vacancies. Most property funds are yielding about 9.8%.
Equities are an important part of a portfolio and this is the space for growth and income through tax free dividends. It has never been so important than to make sure you are getting good advice.
Yesterday, I mentioned if you had invested in R1000 in equities in 1960 it would be worth R5.4 Million today and if it was invested in cash it would have been worth just under R100k.
Equities have recovered from March '09 mainly due to foreign investors coming back to SA. One must always realize that markets look forward. That is why foreign investors are investing in SA again. If one looks ahead things are looking very positive for SA even though our economy is still struggling.
To the rest of the world emerging markets are the place to be investing. South Africa represents 7% of the Emerging Market Index. South Africa even had it’s credit rating upgraded to “A” grade, one of only 3 countries world wide who had their credit ratings upgraded during this year the other two countries are China and Chilli.
PE ratios are still at historical lows on the JSE. The ALSI dividend yield is at 5% and things are looking very good. Mid Cap PE’s are very cheap. Interest Rates are low and there is a huge amount of cash that is moving back into the markets, therefore equities are definetley the place to be going forward. Make sure you don’t sit on the side and miss out. Interesting fact is that after the last major crash on the JSE in 1970, a year later in 1971the JSE returned 50%.
Speak to me and I will gladly look over your investment portfolio and make recommendations at no obligation.
