Today on Talk Money, I highlighted the importance of selecting correct investments based on Time Horizons. I often come across clients that miss out on better portfolio returns because they are risk adverse or poorly advised. Many people think that keeping all their money in cash or similar investments is a safe option. Over the long term this is more risky as the value of cash is eroded by inflation and tax. This is often a serious problem for many retired investors in particular who rely on the interest.
These top performing Unit Trusts give an example of the importance of considering the time horizon when investing:
1. Stanlib Property Income Fund: 1 year: 29% 3 years: 60% 5 years: 193%
2. Coronation Top 20 Fund: 1 year: 43% 3 years: 49% 5 years: 208%
When making investments one should consider a 3 - 5 year horizon. It is highly unlikely that a well managed fund will have negative returns during this time period. Another factor to consider is that these investments will pay dividends which can be re-invested or provide a tax free income stream.
If you would like to start an investment portfolio or would like me to review your investments drop me a line or give me a call.
