Victus Group

When it comes to making money, other than winning the lottery or inheriting vast sums, there are no get-rich-quick schemes. Believe us, if there were – we’d know!

The best way to make your money begin working for you (instead of you working for your money…) is to slowly and steadily build an investment portfolio. One of the challenging parts of this journey is working with an ever-changing interest rate.

As Investopedia puts it: The interest rate is the amount a lender charges a borrower and is a percentage of the amount loaned.

What this means is that when interest rates rise, the cost of borrowing money increases. Traditionally, interest rates are increased to rein in inflation due to the ‘over-heating’ of an economy.

But, not everybody is worse off when interest rates rise. People who borrow to purchase a house or a car are worse off because it costs them more to finance their purchase; however, savers benefit because they can earn higher interest rates on their savings.

At Victus Group, we believe that periods of increased interest rates offer opportunities for short-term investors to explore cash. In this environment, investors need to be very cognisant of their time horizon, which will determine how they should position their portfolios. Investing short-term savings in the Corporate Cash Manager (CCM) or Income Funds might be suitable.

CCM, for example, is a bank savings account that offers a competitive alternative to investing in money market funds (it takes the average from FNB, Standardbank, Investec and ABSA). From a short term-perspective, cash is attractive when rates go up, but if you are risk averse, you should perhaps be more conservative.

For our clients who are able to hold a long-term approach, it’s helpful not to be influenced by short-term market movements. Those thinking about retirement in ten or 20 years can afford to weather the storm. A while ago, we read an article where Leevania Naicker, investment analyst at Sygnia Asset Management, said, “Over time, equities should out-perform all other asset classes and inflation.”

If you need to make adjustments to your portfolio or simply need some encouragement to stay put, give our team a call and let’s see how we can help you keep your money working for you.