During a period of strong equities markets and outstanding returns, the cautious investor understands the importance of protecting their capital from a risk premium.
As markets spike and fluctuate, the need for intelligent wealth management methods grows, especially for South Africans who must measure and manage their wealth on a worldwide scale.
This is Citadel chief economist and advisory partner Maarten Ackerman’s perspective on the current investment climate.
He pointed to four key investment philosophies that are key to building wealth:
Recognise that the future is uncertain, and hence investors must diversify across many asset classes that will respond differently under different economic circumstances.
Valuations must make sense. A small number of companies have outperformed the equity market, propelling it to new highs.
When one asset class dominates, such as high-growth technology or AI, other methods, such as fixed income and yield investing, are sometimes overlooked. These under-appreciated areas may yield higher profits in future years.
Investor portfolios need diversity of assets over an array of countries, currencies, and companies.
It is vital to understand the financial environment and improve your asset allocation in order to preserve wealth when risk is higher.
This is typically an under-appreciated factor in the wealth management relationship—investors often focus too much on their returns and not enough on the preservation element.
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