How to Make Your First Million by Warren Ingram

Author:Warren Ingram
Language: eng
Format: epub
ISBN: 978-1-7702-2762-0
Publisher: Penguin Random House South Africa
Published: 2016-08-11T04:00:00+00:00

Stock-market growth from 1900 to 2011 for South Africa, USA, Europe and the world

Nominal growth

Real growth per year

South Africa

12.5%

7.2%

USA

9.3%

6.2%

Europe

7.7%

4.6%

World

8.5%

5.4%

Source: Elroy Dimson, Paul Marsh and Mike Staunton, Credit Suisse Global Investment Returns Yearbook 2012 (Zurich: Credit Suisse Research Institute, 2012)

When does global investing make sense?

There are some good reasons to invest money overseas. First, it always makes sense to have diversification in your portfolio. Global shares, bonds and property do grow at different times relative to South African assets, and your overall growth will be better with a portion of your capital invested in overseas investments (e.g. 25% to 50% of your portfolio).

Second, you can benefit from the rand depreciation when it occurs via a currency investment. This means that you might consider investing a portion of your money directly into another currency. You could buy a US-dollar money-market unit trust with 35% of your overseas money, and put the remaining 65% into international shares. If the rand starts to weaken, you will benefit because your US dollars will be worth more rands over time. The investment in shares is there to ensure that your capital does not lose pace with inflation.

If you are planning to live overseas or are concerned about your long-term future in South Africa, then it might be wise to invest a greater amount offshore.

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