Before you begin investing, it’s important to understand two key factors that will guide your decisions: your risk profile and your time horizon. These may assist in understanding which investments align with your goals, preferences and financial situation best.
Your risk profile reflects how comfortable you are with taking on risk in exchange for the potential for higher returns. Every investment comes with some level of risk, but the amount you're willing to accept will shape your investment strategy.
Here are a few things to consider when assessing your risk tolerance:
Are you willing to accept fluctuations in the value of your investments, or do you prefer more stability, even if it means lower returns?
How would you feel if your investments temporarily dropped in value? Understanding your emotional response to market swings can help you gauge your comfort level with risk.
Are you saving for something in the near future (like a home or vacation), or are you looking to build long-term wealth (like for retirement)?
If you prefer safety and stability, you might lean towards conservative investments. If you're comfortable with more volatility in exchange for higher returns, you might opt for growth-focused investments.
Your time horizon is the amount of time you expect to keep your money invested before you need to access it.
This timeline will influence your choice of investments:
(1 - 3 Years)
If you need access to your money soon-like for buying a house or a major purchase-you'll want to focus on lower-risk investments that are less likely to fluctuate in value.
(3 - 7 Years)
For goals in this range, you can afford some market volatility, allowing you to balance risk and return with a mix of safer and higher-growth investments.
(7+ Years)
If you're investing for the long haul-such as for retirement-you can take on more risk, as time gives your investments the potential to recover from short-term market dips.
Understanding your risk tolerance and time horizon helps you build a portfolio that aligns with your goals. By considering both factors, you can select investments that fit your comfort level and allow you to stay on track toward your objectives.
Use the tool below to indicate your risk profile and time horizon and find out which flagship funds are best suited towards you.
A unit trust pools money from multiple investors to invest in a diversified portfolio of assets. Investors hold units representing their share of the fund, with the value fluctuating based on the fund’s performance.
A Tax-Free Savings Account (TFSA) allows you to save and invest money without paying taxes on the interest, dividends, or capital gains earned until a certain contribution (R35 000/year or R500 000 over time). It’s a flexible way to grow your wealth while enjoying tax benefits.
Offshore investments refer to investments made in foreign countries outside your home country, offering potential tax benefits, diversification, and access to global markets.
Risk level refers to the amount of uncertainty or potential loss an investor is willing to accept in pursuit of higher returns. It ranges from low-risk, stable investments to high-risk, high-reward options.
Time Horizon in investing refers to the length of time an investor expects to hold an investment before needing access to the funds.
This tool does not take account of your financial affordability or personal needs. It is not intended to provide recommendations, guidance or proposals regarding the purchase of any financial product. It assists you in understanding your choices. For advice regarding the funds that would best suit you, please speak to a Financial Adviser.
Please enter to search or esc to cancel
