Taking the complexity out of investing: The ONE big decision to get right

We tend to think of investing as something very complicated, reflecting the complexity of the world we live in.

At the same time we're inundated with investment advice from all kinds of sources, ranging from social media to mainstream media and and books by experts.

It really can be much simpler to invest wisely, is the reassurance from regular Money Show contributor Warren Ingram.

The personal financial adviser says we need only to focus on one big decision to give ourselves the best chance of success over the long term.

"We need to understand that there are ways to make investments complex and we see product providers and fund managers, stock brokers and derivatives traders.... and now crypto people, creating complexity."

"For us as ordinary individual investors though, we need to really get one big decision right, and then we can allow everyone else to get on with all their complexity, while we get on and build our wealth."

Warren Ingram, Executive Director - Galileo Capital 

The secret sauce is to get your mix of assets right for your own requirements.

Ingram shares the basics to achieve this.

THE MAIN ASSET TYPES:

1. Shares: Typically offer higher potential returns but come with increased volatility. Investing in local companies listed on the Johannesburg Stock Exchange (JSE) can provide growth opportunities.

2. Fixed Income (Bonds): Generally provide more stable returns and can cushion your portfolio during equity market downturns.

3. Cash: These assets provide liquidity and safety, making them essential for short-term needs and emergencies.

4. Real Estate: Property investment can yield rental income and capital appreciation.

The benefit of getting the asset mix right is two-fold, Ingram says.

It firstly allows you to find the right balance between growing your money and taking the necessary risks to achieve your growth targets.

Then it also becomes a guardrail, preventing you from emotional decision-making during times of turbulence.

HOW TO GET YOUR ASSET MIX RIGHT:

Decide how much can you lose: Understand how much risk you are willing to take based on your financial situation, investment goals, and time horizon. This assessment will guide your asset mix.

Define your financial goals: Establish clear objectives - such as saving for retirement, funding education, or purchasing property - that will inform your investment choices

Remember this is not a sport or hobby: Tracking your investments every day is a recipe for disaster. It should be boring and systematic, not exciting.

Scroll to the top of the article to listen to Ingram's detailed advice