The most expensive investment mistake you can make

By Sonia du Plessis*

Investors the world over have a love-hate relationship with equity markets, because they fear losing money whenever markets become too choppy. But what if I can show you this fear is overdone?

Here’s what South African investors actually did in 2025. They moved R56.4 billion into money market and short-term interest-bearing funds. Another R52.1 billion went into income (cash & bonds) portfolios. Investors also pulled R16.5 billion out of pure SA equity funds, of which R15.9 billion was in the last three months of the year alone.

Meanwhile, the S&P 500 delivered a total return of 17% (USD), during 2025. The Nasdaq delivered a total return of 21% (USD) and Emerging markets had a return of 33% (USD). Our very own JSE All Share Index delivered a total return of 42.4% (Rands) last year. Imagine if all the money that flowed into money market and bonds went into one of the above mentioned markets. Well done to the investors who stayed put, they captured all that growth, while the ones who moved to ‘safety’ did not.

But investors, are not always fully invested in equity markets. If you followed a more diversified approach with your investments in 2025 you would have easily clocked in 19% growth. This is if you had the below asset split.

Markets and investing can seem overwhelming to many, especially women. However, I want to tell you that it isn’t rocket science, and you don’t need to be an expert to grow your money over time. For women especially, the research is consistent: they tend to be more risk-averse than men when it comes to investing, and more likely to move to conservative options when markets get uncomfortable. That caution is completely understandable. But it’s also one of the most expensive financial habits you can have, because long-term data shows that staying invested, not avoiding risk, is what protects your wealth.

Four reasons equities keep winning

• Compounding works in your favour.

When your returns generate their own returns, the growth becomes exponential over time. Even modest annual gains become significant wealth given enough time. This is why time in the market matters more than timing the market.

R100 000 growing at 10% annually becomes about R259 000 in 10 years, R673 000 in 20 years, and

R1.74m in 30 years.

Time matters more than Timing.

• Equities protect you from inflation.

As the cost of living rises, companies generally pass those increases on to consumers and maintain their margins. Cash and fixed-income investments lose real purchasing power over time. Equities don’t.

• Innovation drives long-term growth.

The companies you’re invested in adapt, expand into new markets, and develop new products. Over decades, the breakthroughs in technology, healthcare, and energy have driven enormous shareholder value. You own a share of that progress.

• Discipline will be rewarded.

The investors who build the most wealth aren’t always the smartest – they’re the ones who stayed invested when market conditions were uncomfortable. Panic-selling during downturns locks in losses and keeps you out of the recovery. Patience is a strategy, and it pays.

60 years of proof

Here’s a quick reality check in case you need convincing: If you’d invested $100 in cash in 1965, you’d have $1,500 today – a 4.5% annual return over 60 years. Government bonds would’ve grown that $100 to $2,800. Corporate bonds to $9,200. Gold, often seen as the ultimate safe haven, reached $12,000.

That $100 invested in stocks, by comparison, would have been worth $43,000. That’s a 10.4% annual return over the same period, sourced from NYU Stern data. Stocks outperformed gold by 3.5 times. The gap isn’t luck – it’s compounding, inflation protection, innovation, and discipline, playing out over six decades.

Who should be in equities

The short answer is almost all investors, and with more equity exposure, than you would think.

If you’re in your 20s, 30s or 40s, current investment practices indicate that you should have maximum equity exposure. The reason is that time is your most valuable asset, and it’s the ingredient that turns 10.4% per annum into $43,000 from $100.

If you’re near or in retirement, research shows you should still hold at least 55% in equities, in your retirement portfolio. You’ll probably spend 20 to 30 years in retirement, which means your portfolio still needs to keep growing throughout. Cash won’t do that.

If you moved to safer funds in the last year because the headlines made you nervous, it’s worth revisiting that decision with your adviser. The headlines won’t stop, but your response to them can change.

Whether investing excites you or scares you, I know from experience that the best results come from speaking to an expert. You don’t need to be the expert or have all the answers, that’s where advisors and wealth managers can help you make calm, informed decisions.

*Sonia du Plessis CFP®, is head of Brenthurst Wealth Stellenbosch