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By Maria Smit *
Between rampant crime, loadshedding and record unemployment, South African investors have quite a few things keeping them up at night. The last thing they want to worry about is their retirement savings, but that’s not a luxury we have.
There are many factors and forces that influence the short-term fortunes of the stock market. And many of those factors are top of mind for local investors trying to secure a comfortable retirement.
With that in mind, here are four of the biggest concerns that South African investors have, and what you can do to avoid or mitigate these risks.
Inflation
Inflation is on the rise globally and domestically, threatening to upset an already-wobbly apple cart.
The big danger here is not only that your buying power is being eroded, but that your investments may struggle to beat inflation. This is particularly dangerous if, like many South African investors, you’ve decided to avoid risk by switching to less volatile money market funds.
The biggest problem with this strategy is that these low-volatility assets are also low-return assets. And with inflation rising, you run the risk of your returns underperforming inflation over the long term.
What can you do? An effective strategy is to diversify your portfolio by categorising your investments by their purpose. For instance, if you have a long-term horizon of five or more years then you can take on more risk because you’ll be able to ride out short-term volatility.
However, if you’re going to need some of your funds in the next year, then it’s probably best to hold that in the money market until you need it.
A market crash
The fear that the market may crash is understandable, if not entirely logical. History tells us that markets can fall spectacularly, like in 1929, and 1987, and 2001 and 2008. Let’s not forget March 2020 either when global markets fell as much as 30% when COVID-19 lockdowns halted the world economy.
Fear of losing their savings in another big crash has driven many South Africans into less risky assets.
What’s important to appreciate is that it’s not uncommon for volatile (and therefore risky) assets to show a downward movement over a month or two. Sometimes this can be for as long as 12 months before the price picks up again.
Which is why we insist that if you’re invested in high-risk assets like listed shares then you need to hold that investment for at least five years, if not longer This time horizon allows the short-term dips in your investment to fade into the distance as the price inevitably climbs over time.
This is illustrated perfectly in these two graphs. In the first, the movements appear quite dramatic. But that’s only over a month. When you look at that same graph over a five-year period you can see that the volatility smooths out and what seemed a big movement is nothing more than a blip on the graph.
Market movements over 1 month
Market movements over 5 years
What can you do? The best advice I can give is to ignore the short-term moves in your portfolio. Tracking progress every day of the week can be emotionally exhausting.
Market valuations
After inflation, inflated stock prices are the next-biggest threat for South African investors. And not for the reason that you may think.
The danger in higher prices, which contribute to higher price:earnings ratios, is investor reluctance to enter the market.
Many local asset managers have been telling their clients that South African shares are cheap, certainly comparable to some offshore assets, and that it’s a good time to invest locally. However, I question the sense in this if you consider the negative impact from domestic pressures like constant loadshedding, political instability and a volatile rand.
What can you do? Rather than sitting out the market in anticipation of a correction that will lower the price of offshore assets I suggest that you phase your funds into the market instead of investing a lump sum at once. This should mitigate the risk of trying to time the market, and as a result doing nothing.
If you’re sitting on a pile of cash from an inheritance, selling a property, or from selling out of the market, consider implementing this strategy to get your money back to work. Statistically, you have a higher probability of success if you put it all in at once, but regret aversion is a powerful force, so this is your next best option.
Higher interest rates
It’s only natural that fear of higher interest rates goes hand-in-hand with the worry about inflation. Central banks tend to fight inflation by raising rates, which we’ve seen the SARB do in November this year, with signs that developed market banks will follow suit.
Higher rates are not, however, always bad for your investment portfolio. For instance, higher rates often lag inflation and the act of raising rates can at times halt inflation.
Also, rising rates force stock prices lower because corporate earnings will be lower due to subdued demand. And as interest rates move up, the cost of borrowing becomes more expensive, meaning demand for lower-yield bonds will drop, causing their price to drop.
What can you do? One strategy to counter the impact of rising interest rates is to consider a flexible fund. This is because the fund manager has the option to invest in shares or money market instruments. By the same token, sufficient diversification across different asset classes is a sound strategy to avoid over-exposure to one asset class.
- Maria Smit is a Financial Planner at Brenthurst Wealth Pretoria.
Megan joined the Brenthurst Wealth team in March 2026 as an Administrative and Fiduciary Services Assistant at our Val de Vie Office in the Western Cape. Prior to joining Brenthurst, Megan gained three years of experience in the retail sector, where she developed management and client service skills.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Esmarelda Isaacs-Andreas joined the Brenthurst Wealth Stellenbosch office in October 2025, taking on the dual role of Receptionist and Fiduciary Administrator.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Ashley joined Brenthurst Wealth in January 2025 as Office Administrative Assistant and Receptionist for the Stellenbosch Office.
René Heystek joined Brenthurst Wealth in November 2023, as receptionist and administrative assistant in the newly established George/Garden Route office.
Michelle Heystek has built a career in the financial services over the last two decades, after obtaining her B.Com degree in Financial Management in 2005. Once she joined Brenthurst in 2006, she continued her academic journey, obtaining her Certificate in Wealth Management from INSETA in 2007, followed by a Postgraduate Diploma in Financial Planning from the University of the Free State. In 2008, she earned the Certified Financial Planner (CFP®) designation.
Anelle joined Brenthurst Wealth as a Receptionist and Administrative Assistant to Brian Butchart in the Cape Town office in December 2023. She has a wealth of knowledge from working as a liaison between Financial Advisers and clients at TMA and Absa Investment Management Services (Aims) since 1998. She obtained her B. com degree from the University of Port Elizabeth in 1997.
ADMITTED ATTORNEY | FINANCIAL PLANNER & HEAD OF BRENTHURST FOURWAYS
Sanet was appointed in April 2020, joining our Cape Town team as an Executive Administration Assistant to Renee Eagar. She has been in the financial services industry since 1990. Her previous experience includes positions at Sanlam, BJM and ABSA. She spent her last 12 years working at Alexander Forbes Private Client Wealth as a Senior Wealth Management Assistant. She has received numerous accolades over the years which include but not limited to, Alexander Forbes Client Service Excellence – Silver award in 2014,2015 and 2017. Sanet has also obtained her Certificate in Wealth Management (NQF 5) in 2012 and achieved “Best Student of the Year” from Moonstone.
Maria Smit is a Certified Financial Planner® with over 10 years of experience in the financial planning industry.
