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Private Banking
Welcome to Private Connect March 2018

Balanced investment

The main challenge facing investors is earning acceptable returns on their investments while managing the risks involved.
Investing intelligently boils down to making a calculated trade-off between risk and returns. The secret is to diversify investments, take into account the period of time available before the money will be needed and, at the same time, earn reasonable returns on the capital without taking undue risks.
It is crucial to diversify investments across the different asset classes in such a way that they work together to form a portfolio that is able to beat inflation over time and offers acceptable returns. Investors donít have to adopt an all-or-nothing approach if a portfolio consists of diversified and well-managed investments in cash, property, bonds and equity.

Unless returns on investments at least keep up with inflation, the investor will find that over time he is unable to maintain his standard of living. This is where the available period to invest comes in. The longer the period available for the investment before the money is needed, the more risk an investor can afford to take. And the higher the risk, the bigger the potential return will be in the long term.

Cash is the safest asset class but provides the lowest return over time. Cash covers investments such as on-call deposits in banks, cash management trusts and similar short-term interest-bearing investments.

Bonds are interest-bearing investments that involve a longer period of maturity. Bonds are low to medium-term risk investments and provide low to medium returns over time.

Property as an asset class potentially offers investors healthy capital growth, depending on the investment period as well as the specific point in a property cycle in which the investment is made and the price paid for the property.

The last asset class, equity, carries the highest risk but offers the best potential for capital growth. Offshore investments are viewed by many as a separate asset class, which can add great value to a portfolio from a diversification point of view.

For more information, please contact your Banker, who will refer you to an Investment Specialist.
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