Investment Strategies: Now is the time to invest
While many people are concerned about the lowered markets and the effect it has on their existing investments, we’d like to remind you that now is the ideal time to invest. Low market prices allow you to buy more “units”, which means that when markets improve, you’ll see substantial growth and rewards.
The advantage of Rand-cost averaging
Rand cost averaging is a wealth-building strategy. It involves investing a fixed amount at regular intervals over a period of time in an investment vehicle that has a fluctuating price, such as unit trusts, retirement annuity, endowment or shares.
The concept of rand cost averaging is relatively simple: By investing a fixed rand amount on a regular basis, one buys more units or shares when prices are low and fewer when prices are high. With rand cost averaging in declining markets the actual purchase price per unit/share will be lower than the average of the ruling prices at which one bought.
Therefore, while it may be tempting to stop or pause recurring premium investments during these difficult times, it will be wasting the opportunity to benefit from rand cost averaging which it should lead to better returns over the longer term.