As South Africans come to the end of a frustrating year, it is a good time to reflect on the year that was and set our sights on how we are going to tackle 2020. This week, we touch on Investonline’s successful year, review how our 2019 predictions panned out, summarise our market views for 2020, highlight our most popular articles of the year and feature our leading financial planning tools and processes.

As we start rounding off a challenging year, now is a good time to reflect on some financial mistakes we should avoid going into 2020.

In my 30 years in the investment market, I can’t remember the mood in the country being this negative – and that is despite an exceptional Rugby World Cup win! Other than Ramaphosa being removed as President, I can’t think how things could get any worse. I believe, economically, the country is near its low point and that this is being reflected in investment markets. Allan Gray has written an article outlining 10 critical areas that need ‘doing’ to get the country to start growing, which we have summarised for you.

The Springbok strategy this past weekend against Wales was not pretty, but it worked. Just as the Boks have a plan that plays to their strengths and produces a win, so too should each person have their own unique plan to meet their financial goals. The plan does not need to be dynamic or creative, but it must be tailored to your needs. It starts with engaging with a qualified independent financial advisor, as recommended by Allan Gray. Please read Allan Gray’s views on the role of an advisor in your investment success.

As our hope for a material recovery in the economy fades, let’s not confuse this with good investment opportunities. We need to be realistic about what the environment presents and position ourselves according to our own personal risk profiles. Please read our fourth quarter economic and market outlook report where we highlight the difference between economic activity and investment opportunity.

When you retire, you have two important choices to make with your retirement savings, accumulated throughout your working life. These decisions require careful thought, which could have a material impact on your retirement lifestyle.

The value of the Rand is a hotly debated subject as its volatility impacts on both our spending and financial planning. As an investment analyst/manager for the past 30 years, the one “investment input” I’ve observed experts get wrong most often, is forecasting the Rand exchange rate in the short to medium term (1 to 5 years). It is so difficult to predict that it has led to most SA fund managers no longer forecasting the Rand. Therefore, it is important to try and understand what drives the Rand and how as an investor you should incorporate foreign exchange into your investment portfolio.

Constant negative news – both locally and offshore – can be distressing as well as becoming tiring and frustrating. Unfortunately, we can’t ignore it, so it’s best we learn how to deal with it, especially as it impacts your finances. When we are emotional, we tend to become more ‘one dimensional’ and don’t always make well considered decisions, which can be harmful. We draw on a recent article from Allan Gray that focuses on behavioral biases in order to identify them when they occur and to help us mitigate them to ensure rational decision making.

The Prosperity Worldwide Flexible Fund of Funds, which I co-manage, continues to produce solid investment returns. Over the last 12 months, the fund is up 17.5% and is the number one performing fund out of 73 funds in its Morningstar Worldwide Flexible category. Since inception (September 2014), the fund is up an average 9.3% per annum. Key to the fund’s steady, good returns, is its very disciplined investment strategy, which takes positions in irrationally priced asset classes with a very tight risk management overlay. We expect these steady returns to continue, making the fund well suited for the current volatile environment.

If you can’t tolerate poor investment returns any longer, a solution is to “park” your money in a conservative portfolio comprising mainly income funds. This “income” strategy has yielded a steady average 8.7% p.a. return over the last four years. By parking your investment in these low-risk funds, you will avoid market declines while still earning a steady return above inflation. We continue to monitor the market environment and investors can switch into a higher allocation of growth assets when the environment improves. Read more about the strategy and recommended funds.