Living in a black swan world: Are my investments safe anywhere?

Black Swan.
INN8 logo.

It is the third year of Covid-19. The entire world has felt the effects of the pandemic and is battling to find a new way of life with the virus still prominent and prevalent. In the investment space, markets have dipped and then recovered while some asset classes are down, but not yet making their way back up to pre-Covid levels.

With so much uncertainty, investors could be asking themselves: Is there even such a thing as a safe haven for my remaining investments? Should I be making changes to my long-term financial plan?

“Black swan events are called black swan events exactly for that reason – nobody knew they were coming,” says Mickey Gambale, CEO of INN8, an independent investment platform solution.

Gambale highlights some of the things that investors currently have to keep in mind when facing an unprecedented world. 

Watch that knee

“The first biggest mistake that anyone can make in volatile market conditions, when it comes to financial plans or investments, are knee-jerk reactions,” says Gambale.  “When you invest, it is always long-term. We know over the long-term how certain asset classes behave, what their long-term return profiles are and what their long-term risk profiles are. If it is short-term, it is actually gambling.”

But what if this time is different, and long-term growth will not triumph over the losses incurred? What if the long-term game will not deliver the growth results investors count on for wealth management?

Growth will triumph – play the long game 

Gambale does not think that this will ever be the case. He believes that global players and governments will put systems in place and execute regulatory decisions that stimulate growth and economic development. 

The best course of action, therefore, is to stick with your long-term plan. Preferably one that has been developed with your needs and requirements taken into consideration and is in place for the long-term – 20-plus years or more.

Spread the risk – over everything and everywhere

It is important to know, says Gambale, that there is no such thing as no risk.

“Even the example of putting your money under your mattress isn’t no risk,” he says. If you are not investing your money and simply holding on to it, inflation will erode the value over time, effectively meaning you lose money by doing nothing. 

So, risk is inevitable. What you need to do is spread the risk. Diversification remains key - over asset classes, investment instruments and, importantly, also over different geographies.

Checks and balances still exist

Investors who are weary of investing locally should have faith in the South African financial regulatory system, Gambale says.

“I believe South Africa has an extremely strong financial regulatory environment. From that perspective we are really on a good wicket,” he says.

So local is not bad, but offshore exposure is prudent. Achieving this mix has become increasingly simpler over time, especially if you partner with a reliable and trusted adviser, who uses a reliable and trusted platform.

INN8’s platform, domiciled offshore in Jersey, aims to further simplify the complexity of offshore investments for the adviser, ultimately for the benefit of the client.

Gambale encourages investors to always have an informed conversation with their advisers. To this end INN8 has written a white paper on offshore investments, with the goal of simplifying and demystifying this world to empower end investors. It can be found here. Using this information to get a better understanding of their options, investors can then co-create the right financial path – both locally and offshore.

This post and content is sponsored, written and provided by INN8. 

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